Pound US dollar (GBP/USD) exchange rate supported by US election jitters
The pound US dollar (GBP/USD) exchange rate is edging higher this morning following the publication of the UK’s finalised services PMI data for October.
At the time of writing, GBP/USD is trading at around $1.2981, up roughly 0.2% from this morning’s opening levels.
Pound (GBP) buoyed by forecast beating PMI data
The pound (GBP) is edging higher against the majority of its peers today as a better-than-expected domestic PMI reading has supported the British currency this morning.
October’s finalised index fell marginally from 52.4 down to 52 last month, ahead of a more modest 51.8 expectation, bolstering Sterling sentiment.
However, as the all-important services sector technically recorded another month of downturn, GBP gains are at a minimal.
Tim Moore, Economics Director at S&P Global Market Intelligence, commented:
‘October data signalled another slowdown in output growth across the service sector as heightened business uncertainty and concerns about the general UK economic outlook had an adverse impact on demand conditions.’
US dollar (USD) undermined by US election jitters
The US dollar (USD) is losing ground against the majority of its peers this morning as rising anxiety ahead of the US’s general election is stymieing the ‘greenback’ this morning.
As America heads to the polls today to vote for the next US President, markets are growing increasingly volatile, with USD investors likely refraining from pacing any aggressive bets as they err on the side of caution ahead of the result.
Erik Knutzen and Jeff Blazek, co-CIOs of Multi-Asset Strategies at Neuberger Berman, comment on the market’s mood, explaining:
‘Uncertainty around control of Congress, particularly the House, could also extend longer than uncertainty over who is in the White House. And a contested result could add still more days or weeks of market volatility.
We have been anticipating a pick-up in volatility as the election nears, and this week is likely to see a peak in that volatility, lasting until we have an unambiguous outcome.’
GBP/USD exchange rate forecast: US data to remain in the spotlight?
Looking ahead, the primary driver of movement for the pound US dollar exchange rate looking at the remainder of the day and moving into tomorrow will likely continue to be key events from the US.
As election day continues, USD exchange rates will likely remain volatile until a result is declared later this evening or early tomorrow morning.
The US will also see the publication of the latest ISM services PMI this afternoon which could offer USD exchange rates some modest support should the data print close to the robust levels reached in September.
Turning to the pound, UK data will be absent from tomorrow’s data calendar which will likely see Sterling trade mostly flat as markets await the Bank of England’s (BoE) upcoming interest rate decision on Thursday.