GBP/USD Exchange Rate Wavers ahead of Key Data
The Pound US Dollar (GBP/USD) exchange rate fluctuated today amid a shifting market mood. Preliminary PMIs may be in focus as the week continues.
At the time of writing the GBP/USD exchange rate is trading at around $1.2251, up approximately 0.2% from this morning’s opening rate.
Pound (GBP) Slumps following Autumn Statement
The Pound (GBP) is retreating from its hawkish wins this afternoon, as this year’s Autumn Statement offers a disappointing downward revision to UK economic growth.
Signs of economic slowing serve to undercut Bank of England (BoE) interest rate hike bets, despite recently hawkish rhetoric from BoE policymakers.
Looking ahead, the UK’s preliminary PMIs are due out on Thursday, and are likely to drive significant GBP volatility. Should November’s data print in line with forecasts, GBP may slump amid further signs of a weakening UK economy. While manufacturing is expected to edge slightly higher to 45, economists forecast that it will remain deeply in contraction territory, providing a bleak insight towards the stagnation of UK economic activity.
Similarly, the services PMI is forecast to report a hold at 49, which may reiterate concerns of a sluggish UK economy. Signs of continuous economic slowing could reinforce recent UK recession anxieties, which in turn may undermine BoE rate hike bets and leave Sterling to end the week on a sour note.
US Dollar (USD) Firms on Upbeat Jobs Data
The US Dollar (USD) firms against GBP today as upbeat data bolsters Fed rate hike bets.
Despite the cautiously hawkish tone conveyed in the latest publication of Federal Reserve minutes, and better than expected employment data,
Despite an initial a spell of upbeat trade capping USD’s wins, the safe-haven currency ultimately strengthened against its weaker peers.
As investors digested the published minutes from the Federal Reserve’s latest monetary policy meeting, the cautiously hawkish tone adopted by policymakers lent the ‘Greenback’ some support. In addition to this, better than forecast employment data further boosted the US Dollar.
Looking forwards, the ‘Greenback’ may remain vulnerable to changes in risk appetite in the coming days with US data running thin on the ground. Any shifts towards cautious trade across global markets may see USD rebound.
As the week draws to a close, the latest preliminary PMIs may drive USD volatility. Economists predict a decline to 49.8 in manufacturing, placing November’s data back into contraction territory. Services is also expected to decline to 50.4 this month. Though remaining in growth territory, potential slowing in the vital services sector could see the ‘Greenback’ falter amid a pullback in Fed rate hike bets.