GBP/USD: Pound Slips ahead of Fed Interest Rate Decision as Mini Rally Fizzles Out
This afternoon the Pound (GBP) has come under renewed pressure from the US Dollar (USD) as traders anticipate this evening’s interest rate decision from the Federal Reserve, which is expected to see a 0.25% hike in lending rates.
This reverses the gains made by the Pound over the last couple of days in what could be described as a mini-rally after last Friday’s Brexit-related selloff.
With a raft of US data due for release later on, including the FOMC economic projections report, any continuation of the US economy’s recent strength is likely to see further pressure on Pound Sterling.
Better-than-Expected UK Retail Activity Fails to Lift GBP/USD Exchange Rate
The Pound is struggling to find any traction despite the Confederation of British Industry (CBI) reporting some robust retail sales growth this month.
According to the CBI’s latest survey of retailers, activity remains remarkably upbeat in September, despite concerns that it would slow down once the stimulus of ‘football and fair weather’ was removed.
Nevertheless, although the headline figures were broadly positive, some foresee underlying problems with the figures.
Anna Leach, Head of Economic Intelligence at CBI, explains:
‘As we head into autumn, retailers have seen the run of decent sales figures continue. But underlying conditions are clearly tougher, with the sector facing significant challenges – from squeezed household incomes, changing consumer habits to digital disruption.’
GBP/USD Exchange Rate Outlook: US GDP Figures Tomorrow Expected to Pile on Pressure for Pound
Looking past the Fed rate decision, the US will publish its final GDP reading for the second quarter on Thursday. Although the Pound remains on a firm footing there is a danger that it could slip back further when the figures are released.
If the figures confirm the US economy continues to go full steam ahead with a growth rate of 4.2 per cent between April and June, we’ll likely see the GBP/USD exchange rate take a hit.
Meanwhile GBP investors will be paying close attention to a speech by Bank of England (BoE) Governor Mark Carney tomorrow afternoon as they look for any signal as to whether the recent upswing in UK inflation could prompt a more aggressive monetary policy from the bank in 2019.
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