Pound US dollar (GBP/USD) exchange rate stays strong following US data
(Updated 16:10, 11/10/24) The pound US dollar (GBP/USD) exchange rate has managed to hold on to its earlier gains this afternoon as markets react to the latest US data.
The latest producer price index from the US showed that producer price growth slowed in September, although the reading did beat forecasts. PPI came in at 1.8%, down from an upwardly revised 1.9% but above forecasts of 1.6%. Despite coming in hotter than forecast, the cooldown in PPI put some pressure on the US dollar (USD).
In addition, the University of Michigan’s consumer sentiment report showed an unexpected decline in American household morale this month. This also kept USD on the defensive.
As a result, the pound (GBP) was able to sustain its earlier gains following the UK GDP figures. Sterling had risen this morning after new data showed the British economy returned to growth in August. However, anxiety around the UK government’s tax plans has kept a lid on GBP/USD’s upside.
At the time of writing, the pound US dollar exchange rate is at $1.3078, up around 0.2% from the start of the European session.
Original article continues below:
Pound US dollar (GBP/USD) exchange rate firms as UK economy expands
The pound US dollar (GBP/USD) exchange rate is ticking higher this morning, although it has not yet recovered yesterday’s losses, after the UK economy returned to growth in August.
At the time of writing, GBP/USD is trading at $1.3078, up just over 0.2% from the start of today’s European session.
Pound (GBP) lifted by positive GDP
The pound (GBP) is enjoying renewed support this morning following the UK’s latest GDP figures.
New data from the Office for National Statistics (ONS) revealed that the British economy expanded 0.2% in August, as expected, after two months of zero growth.
While this positive news has lifted the pound this morning, Sterling still hasn’t managed to regain the ground it lost yesterday. Markets remain concerned about the upcoming UK Autumn Budget, following reports that the government’s plans to raise revenue are in ‘complete disarray’.
Responding to the GDP figures, Chancellor Rachel Reeves tired to revive the government’s narrative that it was focusing on boosting growth. Reeves said:
‘Growing the economy is the number one priority of this Government so we can fix the NHS, rebuild Britain and make working people better-off.
‘While change will not happen overnight, we are not wasting any time on delivering on the promise of change.
‘Next week, hundreds of the world’s biggest businesses will come to Britain as we deliver on our promise to bring investment, growth and jobs back to every part of the country.’
The government is hosting an International Investment Summit next week, ahead of the budget at the end of the month.
US dollar (USD) mixed amid uncertain market mood
Meanwhile, the US dollar (USD) is mixed this morning, as investors continue to digest yesterday’s data.
The latest US consumer price index showed that inflation cooled in September, but by less than expected. Meanwhile, last week’s jobless claims leapt higher.
This mixed data and an uncertain market mood have seen the safe-haven US dollar waver so far this morning. As a result, GBP has been able to capitalise on the upbeat UK data.
GBP/USD exchange rate forecast: US data to dent the ‘greenback’?
Looking ahead, the latest US producer price index could weigh on USD later today.
Economists expect the PPI figures to show that producer price growth eased to just 0.1% in September. As PPI often feeds through into consumer prices, this could fuel expectations that American inflation will continue to cool.
Later on, the University of Michigan’s consumer sentiment survey for October is out. Although an expected uptick in consumer confidence could boost the ‘greenback’, falling inflation expectations may offset any upside.
As for the pound, the latest GDP figures may continue supporting Sterling. However, any more worries about the coming budget could cap GBP/USD.