GBP/USD Exchange Rate Subdued after UK Inflation Misses
The Pound US Dollar (GBP/USD) exchange rate is rangebound this morning following the publication of the UK’s latest consumer price index.
At the time of writing the GBP/USD exchange rate is virtually unchanged this morning, leaving the pairing trading at $1.30.
Pound (GBP) Muted as Inflation Falls Short
The Pound (GBP) is trading sideways against the US Dollar (USD) this morning after UK inflation fell short of expectations last month.
According to data published by the Office for National Statistics (ONS), UK inflation held at 1.9% in March, missing forecasts that it would tick up to 2%.
The ONS attributed the stalling of inflation to falling prices for food and recreational pursuits, which offset a rise in clothing and transport costs last month.
This leaves inflation below the Bank of England’s (BoE) 2%, likely further dampening the Bank’s appetite for any rate hikes this year as it already wrestles with the uncertainty of Brexit.
US Dollar (USD) Muted as Impressive China Data Buoys Risk Appetite
Meanwhile demand for the US Dollar (USD) has dried up this morning as a risk-on mood washes over markets.
This comes after China published a slew of upbeat economic data during the Asian session, which has crippled demand for safe-haven currencies like the US Dollar.
Markets were particularly focused on China’s first quarter GDP figures, which revealed China’s economy fared better-than-expected at the start of 2019, with year-on-year growth holding at 6.4%.
Commenting on the data, Julian Evans-Pritchard, senior China economist at Capital Economics, said:
‘There is no denying that China’s economy ended the first quarter on a stronger note. China’s economy will bottom out before long if it has not already.’
GBP/USD Exchange Rate Forecast: Will a Contraction in UK Retail Sales Weaken Sterling?
Looking ahead, the Pound US Dollar (GBP/USD) exchange rate is likely to come under pressure again on Thursday as the UK publishes its latest retail sales figures.
Sterling is expected to weaken following the data as economists forecast that sales growth in the UK will have slumped from 0.4% to -0.3% last month, likely as a result of consumers limiting purchases in the face of heightened Brexit uncertainty.
In the meantime however, the US will release its latest trade figures later this afternoon, with the US Dollar potentially facing some headwinds if the domestic trade deficit expands in February as expected
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