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GBP/USD Exchange Rate to Slide following BoE Rate Decision?

Pound US Dollar

GBP/USD Exchange Rate dented ahead of BoE Meeting

The Pound US Dollar (GBP/USD) exchange rate has drifted lower this morning as markets brace for the Bank of England’s (BoE) latest interest rate decision.

At the time of writing the GBP/USD exchange rate is trading at around $1.2766, down roughly 0.3% from this morning’s opening rate.

Pound (GBP) to Slip following BoE Interest Rate Decision?

The Pound (GBP) is trading in a wide range against the majority of its peers today as markets await the Bank of England’s (BoE) latest interest rate decision this afternoon.

With the central bank expected to keep interest rates on hold for a fifth consecutive time this month, GBP investors will primarily focus on the central bank’s forward guidance.

As uncertainty mounts surrounding the timing of the bank’s first rate cut, should the BoE successfully push back against speculation that it could begin loosening its monetary policy in June, Sterling could strengthen.

However, a larger-than-expected cooling of UK inflation in February may prompt policymakers to discuss loosening monetary policy earlier than expected, and could see GBP exchange rates slide.

At the end of the week, UK retail sales are forecast to have dropped, from January’s 3.4% expansion down to a 0.3% contraction for February’s reading.

Should the data confirm a slowdown in the UK retail sector, the Pound could end the week on the defensive.

Jobs Data to Dent US Dollar (USD)?

The US Dollar (USD) is trapped in a narrow range this morning ahead of impactful US data releases scheduled for this afternoon.

US initial jobless claims for the week ending 16 March could sour USD sentiment if they confirm a predicted 215,000 person increase in new jobless claims, as it may renew concerns over the strength of the US labour market.

Also due out this afternoon are S&P’s latest preliminary PMIs for the US. This may also infuse volatility in USD exchange rates as both the services and manufacturing sectors are expected to report a moderation of activity this month.

Further stymieing the ‘Greenback’ are this morning’s upbeat trading conditions, which is limiting demand for the safe-haven currency.

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