GBP/USD Exchange Rate Rangebound as US Markets Await Verdict on US Stimulus Package
The Pound to US Dollar (GBP/USD) exchange rate held steady today following the publication of the latest US inflation figure for February, which undershot forecasts at 0.1%. The pairing is currently fluctuating around $1.38.
Joshua Mahony, the senior market analyst at IG, commented on the stability of global markets, saying:
‘[US President] Joe Biden is expecting to finally see his $1.9 trillion stimulus package passed today, yet early European trade highlights ongoing concerns.’
As a result, the USD/GBP exchange rate held largely steady today with investors continuing to monitor the larger global Covid-19 crisis.
Today will see the final vote on Biden’s historic stimulus package. As a result, global markets are remaining cautious ahead of the important decision made by the House.
OECD Chief Economist Laurence Boone commented:
‘This will not only boost the U.S. economy, but it will fuel global growth through increased demand in the U.S. and from the U.S. to the rest of the world.’
Now that coronavirus infections are showing signs of dropping as more and more nations rollout vaccinations, demand for the safe-haven US Dollar has remained relatively stable.
Pound (GBP) Exchange Rate Steady as UK Markets Quiet on Lack of Data
The Pound (GBP) held steady today largely owing to a lack of significant UK economic data. Instead, GBP investors are monitoring the nation’s Covid-19 situation.
Daily cases of Covid-19 in the UK continue to fall, with the number at 5,766 (down -625 against last week). Those in hospital, however, has fallen significantly at -3,362 compared to the previous week.
As a result, GBP investors are remaining cautiously optimistic about the outlook for the UK’s economy in the months ahead.
Yesterday also saw the Governor of the Bank of England (BoE), Andrew Bailey, express optimism in the economy, saying that he now sees a light at the end of the tunnel.
Mr Bailey said:
‘There are reasons to believe that so-called long-term scarring damage to the economy will be lower than in past recessions. If I had to summarise the diagnosis, it’s positive but with large doses of cautionary realism.’
Meanwhile, UK markets are largely in wait-and-see mode due to a lack of influential economic data or notable comments from Downing Street.
GBP/USD Outlook: US Jobless Claims in Focus
US Dollar (USD) investors will be awaiting tomorrow’s release of the latest US Initial Jobless Claims report.
Any signs of rising levels of unemployment in the US, however, would be USD-negative.
Risk-sentiment will continue to drive the USD/GBP exchange rate. If the outlook for the global economy continues to improve, then demand for the safe-haven USD will suffer.
Pound (GBP) traders will continue to monitor the UK’s coronavirus situation.
The GBP/USD exchange rate would head higher if the outlook for the UK economy continues to improve.