The Pound US Dollar (GBP/USD) exchange rate is firming this morning following stronger-than-expected UK retail data.
At the time of writing the GBP/USD exchange rate is trading at around $1.2696, up approximately 0.2% from this morning’s opening rate.
Pound (GBP) Firms on Improving Retail Data
The Pound (GBP) is strengthening this morning following the Confederation of British Industry’s (CBI) distributive trades data. The sales gauge hit -7 this month, compared to February 2023, though smashed forecasts of -47.
Looking ahead, a data-light week in the UK may see Sterling left mostly vulnerable to commentary from Bank of England (BoE) policymakers and market volatility.
BoE hawk Dave Ramsden is due to speak on Tuesday morning. Should Ramsden continue to advocate that interest rates need to remain ‘higher for longer’, the Pound could garner investor interest.
However, further talk of restrictive monetary policy may fail to convince markets of recued BoE rate cuts this year amid UK economic uncertainty and ongoing recession woes.
A speech from BoE Chief Economist Huw Pill on Friday could infuse GBP exchange rates with additional volatility on Friday. Like his peers, any convincingly hawkish commentary from Pill could serve to lift the Pound amid pushed back BoE rate cut bets.
US Dollar (USD) Slumps amid Data Lull
The US Dollar (USD) is flat this morning amid a lack of notable releases.
The ‘Greenback’ may see a volatile week of trade ahead with the release of market moving data in the coming days, starting off with the latest durable goods orders report, due for release on Tuesday morning. A forecast slump to -4.8% in February’s month-on-month readings will likely weigh on the ‘Greenback’, pointing to economic slowing in the manufacturing sector.
On Wednesday the latest GDP data for the fourth quarter of 2023 is due for release and could drive both USD and market volatility. The second estimate is due to report 3.3% growth during the final quarter of last year, down from 4.9% in the third quarter. Should the data print as expected, the Federal Reserve may face renewed pressure to begin reducing its base rate in order to maintain a sense of economic momentum in the US economy, thereby denting USD. However, USD’s losses may be limited, with economic expansion still in place.
The latest ISM services PMI on Friday is due to print at 49.5 in February, up from last month’s 49.1. Ongoing contraction in US factory activity could serve to limit USD’s movements as the week draws to a close.
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