GBP/USD Exchange Rate Muted Following BoE Ramsden Speech
The Pound US Dollar (GBP/USD) exchange rate is stuck in a neutral range this morning, following a speech by Bank of England (BoE) Deputy Governor Dave Ramsden.
At the time of writing the GBP/USD exchange rate is virtually unchanged this morning, leaving the pairing trading at $1.26.
Pound (GBP) Muted on Gloomy Growth Forecast
The Pound (GBP) is trading sideways this morning, after the BoE’s Ramsden suggested the bank’s recent growth forecast may have been overly optimistic.
Speaking to businesses in Inverness, Ramsden suggested that productivity and investment are likely to undershoot the BoE’s expectations this year, likely leading to the UK missing the Bank’s forecast of 1.5% growth.
‘Relative to the best collective judgment expressed in the MPC’s central forecast I am … a little more pessimistic on GDP growth than my colleagues on the MPC.’
Ramsden also took the time to warn against a no-deal Brexit, suggesting that it would have ‘large negative economic effects’.
US Dollar (USD) Steady as China Accuses the US of ‘Economic Terrorism’
Meanwhile, the growing tensions between the US and China have helped to keep demand for the US Dollar (USD) robust this morning.
The latest escalation in tensions comes after a senior Chinese official accused the US of ‘naked economic terrorism’ earlier this morning.
This is a strong indication that Beijing is unlikely to back down anytime soon, something which will see investors retain their positions in the safe-haven US Dollar for the foreseeable future.
GBP/USD Exchange Rate Forecast: Will UK Political Jitters Continue to Temper Sterling Going Forward?
Looking ahead, the Pound US Dollar (GBP/USD) exchange rate is likely to continue to struggle to find momentum over the coming weeks as any upside to Sterling is likely to remain limited by the ongoing political jitters in the UK.
This is or course driven by the upcoming Conservative leadership contest as observers fear that the strong likelihood of a Brexit hardliner taking over as PM greatly increases the chances of a no-deal Brexit.
Meanwhile, the US Dollar could show some movement at the end of this week’s session with the release of the latest PCE Price Index.
This is expected to show a slight uptick in US inflation in April, potentially helping to push USD exchange rates higher.