Pound US dollar exchange rate stable following Iran’s missile attack
The pound US dollar (GBP/USD) exchange rate is trading in a narrow range this morning as markets await Israel’s response to Iran’s missile barrage on Tuesday.
At the time of writing the GBP/USD exchange rate is trading at around $1.3284. Virtually unchanged from this morning’s opening levels.
US dollar (USD) flat amid mixed market mood
Following on from yesterday’s surge, the US dollar (USD) is trading sideways this morning as markets take stock of the current situation in the Middle East.
USD exchange rates stormed higher on Tuesday amid reports Iran was preparing for an imminent attack on Israel.
Iran later launched a barrage of over 180 missiles as Israel. However, it was reported that most of these missiles were intercepted.
This mirrors a similar attack launched by Iran back in April, where the majority of the missiles were shot down before hitting their targets in Israel.
Tensions quickly dissipated following the attack in April, and it seems investors are hoping cooler heads will prevail again, as demand for safe-haven currencies like the US dollar eased again overnight.
Markets remain wary however as Israel has vowed to retaliate against Iran, with many investors playing it safe until they see what form this response takes.
On the other hand, market risk appetite is being underpinned by the startling stock surge in China. Hopes that Beijing’s latest round of stimulus will help to revitalise its struggling economy and bolster global growth are limiting USD demand this morning.
Pound (GBP) Muted amid UK Budget speculation
The pound (GBP) is mostly rangebound this morning fresh concern over UK’s upcoming budget.
Rachel Reeves will unveil her first Autumn Budget as Chancellor at the end of this month, with the focus likely to be on how the Labour government will fill the £22bn black hole they claim was left by the previous Conservative government.
It’s thought that in order to fill this fiscal gap, the Chancellor will announce a series of tax hikes and spending cuts in the budget.
The latest reports suggest this could include cutting billions of pounds earmarked for infrastructure projects, despite Labour’s pledge to invest more in order to boost economic growth.
Pound US dollar exchange rate forecast: Weak US jobs data to drag on USD?
Still to come today is the publication of the latest US ADP employment report.
While not as influential as the non-farm payroll figures, the ADP release could set the tone ahead of Friday’s payroll report.
This could see the pound US dollar exchange rate firm later this afternoon, if another underwhelming reading revives fears the US labour market is cooling.
Turning to tomorrow’s session, the pound may face some modest selling pressure with the release of the latest UK services PMI as September’s finalised index is expected to confirm service sector growth slowed last month.
In contrast, the latest US ISM services PMI is expected to report a modest uptick in service sector activity, which may reflect positively on the US dollar tomorrow afternoon.