Home » GBP » GBP to USD » Pound US Dollar (GBP/USD) Exchange Rate to Fall Further on Risk Aversion?

Pound US Dollar (GBP/USD) Exchange Rate to Fall Further on Risk Aversion?

Pound US Dollar

Pound US Dollar Exchange Rate to Sink Lower as Political Tensions Escalate?

The Pound US Dollar (GBP/USD) exchange rate is sliding this morning ahead of the USA’s consumer confidence release. Confidence is expected to have deteriorated through January, encouraging further risk-off trading and potentially lending tailwinds to the safe-haven US Dollar (USD).

At the time of writing, GBP/USD is trading at $1.3450, down 0.3% from today’s opening levels.

US Dollar (USD) to Firm on Bearish Market Mood?

The US Dollar is likely to come under pressure today if this afternoon’s consumer confidence report reveals weakening sentiment, as expected. Downside will likely be overridden, however, by safe-haven flows which benefit the ‘Greenback’ in times of uncertainty.

Risk sentiment is low today on account of various geopolitical issues – most notably, Russia’s volatile relationship with Ukraine. According to the latest reports, Russia has deployed around 100,000 troops alongside heavy weaponry at the Ukrainian border.

As markets grow increasingly concerned about a possible invasion, the White House has announced that 8,500 troops are on high alert to defend Ukraine if necessary.

According to Pentagon spokesperson John Kirby:

‘In the event of [a deteriorating security environment], the United States would be in a position to rapidly deploy additional brigade combat teams, logistics, medical, aviation, intelligence, surveillance and reconnaissance, transportation and additional capabilities into Europe.’

Also inspiring bearish trading, China’s Commerce Ministry said on Tuesday that China is facing a ‘grim’ foreign trade situation in 2022, the loss of momentum in global economic recovery.

Pound (GBP) Trades Mixed on Weak CBI Data

The Pound (GBP) is trading in a mixed range today on account of uneven data from the Confederation of British Industry (CBI); Sterling may continue to face headwinds as sentiment remains bearish, denting the currency against its safe-haven rivals.

According to this morning’s release, business optimism fell for the first quarter of 2022 despite forecasts of an increase, as morale was damaged by intense cost and price pressures. Average costs in the quarter to January seen rising at their quickest rate since April 1980.

Capping losses somewhat, industrial trends orders remained unchanged in January rather than falling as expected. Output expectations were steady amongst those surveyed, and stocks of finished goods rebounded from a record low.

Further subduing GBP sentiment, however, are ongoing concerns regarding the Tory party leadership: Labour’s deputy leader Angela Rayner issued a statement earlier today calling for Conservative MPs to ‘stop propping [Johnson] up’, adding that the Prime Minister ‘should finally do the decent thing and resign.’

Comments are closed.