Pound US dollar (GBP/USD) exchange rate flat amid absence of data
The pound US dollar (GBP/USD) exchange rate is trapped in a narrow range this morning as both UK and US economic data is thin on the ground.
At the time of writing, GBP/USD is trading at around $1.3097, virtually unchanged from this morning’s opening levels.
Pound (GBP) underpinned by grocery inflation
The pound (GBP) has managed to hold steady against the majority of its peers this morning despite a lack of significant economic drivers.
However, lending Sterling some modest support this morning is the publication of the UK’s latest grocery inflation data, from market research company Kantar.
Kantar reported that grocery inflation edged higher in September, rising from a previous reading of 1.7% up to 2%.
Fraser McKevitt, Head of Retail and Consumer Insight at Kantar, commented:
‘In the fiercely competitive retail sector, the battle for value is on. Supermarkets are doing what they can to keep costs down for consumers and thanks to their efforts the prices in some categories are falling.’
However, preventing any further GBP gains is this morning’s risk-off mood, which has seen the increasingly risk-sensitive Sterling struggle to gain further ground.
US dollar (USD) holds steady despite minimal data
The US dollar (USD) is struggling to garner investor attention this morning as a lack of significant US data releases sees the ‘greenback’ struggle to find a clear trajectory.
However, offering USD exchange rates some modest support are this morning’s risk-off flows.
As an acutely safe-haven currency, USD exchange rates are being underpinned by this mornings cautious trading conditions.
GBP/USD exchange rate forecast: US inflation in the spotlight
Looking ahead, the primary catalyst of movement for the pound US dollar exchange rate looking ahead to Thursday will likely be the publication of the US’s latest consumer price index (CPI).
With core inflation forecast to cool from 3.2% to 3.1% in September while headline inflation is forecast to dip from 2.5% to 2.3% in the same time frame, this could severely undermine the US dollar should the latest inflation reading ramp up a 50 basis-point interest rate cut bets from the Federal Reserve.
Before that, several Fed officials are expected to deliver a number of speeches, alongside the publication of the Federal Reserve’s latest FOMC minutes.
Should there be any further dovish hints before the publication of the US’s upcoming inflation data, USD is likely to falter moving into the second half of the week.
Turning to the pound, UK data is thin on the ground for the majority of the week, and as such, will likely see Sterling trading without a clear direction and mostly in line with risk dynamics.
However, should markets return to upbeat trade, Sterling sentiment could still improve before the end of the week.