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Pound US Dollar (GBP/USD) Exchange Rate Stabilises on Rising Fed Rate Cut Speculation

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GBP/USD Exchange Rate Flat Following Disappointing US Data

The Pound US Dollar (GBP/USD) exchange rate is holding its ground this morning after a run of gloomy US data limits the appeal of the ‘Greenback’.

At the time of writing the GBP/USD exchange rate is rangebound this morning, with the pairing trading at around $1.2585.

Weak US Data Boosts Fed Rate Cut Bets

The US Dollar (USD) is flat this morning as the currency licks its wounds from yesterday, following the release of a slew of disappointing US economic data.

The latest ADP employment report, ISM non-manufacturing PMI and factory orders figures all came in below expectations yesterday, adding further evidence that the US economy is slowing.

This unsurprisingly has added to speculation that the Federal Reserve will need to lower interest rates in the near term, with the US Dollar weakening as analysts increasingly suggesting that this could be kicked off by a cut of 50 basis points in July.

Pound (GBP) Subdued as UK Politics in the Spotlight

At the same time, the Pound (GBP) is struggling to find momentum this morning as the absence of any notable economic data inevitably turns the focus back to the Conservative leadership election, where the two candidates are trying to sell themselves as the only one who can navigate the complexities of a no-deal Brexit.

This of course is unnerving to GBP investors as both Boris Johnson and Jeremy Hunt have begun to speak as though a no-deal Brexit is the default option.

GBP/USD Exchange Rate Forecast: Will a Modest Rebound in US Payrolls Boost the US Dollar?

Looking ahead to the end of the week’s session, movement in the Pound US Dollar (GBP/USD) exchange rate is likely to be dominated by the release of the latest US non-farm payroll figures.

Having plummeted to just 75,000 in May, economists are forecasting that payrolls will have modestly rebounded last month, rising by 160,000.

However, this will still be a relatively weak expansion in employment, likely limiting any upside in the US Dollar as it will another reason for the Federal Reserve to lower interest rates this year.

In the meantime, the release of Halifax’s UK House Price Index could dent the Pound tomorrow morning as economists forecast that domestic house prices will have fallen last month as a result on ongoing Brexit anxiety.