Pound US Dollar (GBP/USD) Exchange Rate Pulled Lower by Fed Rate Hike Bets
The Pound US Dollar (GBP/USD) exchange rate is edging lower today. Expectations of further rate hikes from the Federal Reserve may be pulling the pairing lower.
On the other hand, a return of global risk appetite may be limiting losses for GBP/USD today. Hawkish comments from BoE policymaker Catherine Mann may also be underpinning the exchange rate.
At time of writing the GBP/USD exchange rate was at around $1.2021, which is down 0.2% from this morning’s opening figures.
Will Low Jobless Claims Prompt Fed Bets and Push US Dollar (USD) Higher?
An upbeat market mood may continue to prompt a weaker US Dollar (USD) today. A positive tone in the commodities market may also be keeping pressure on the safe-haven ‘Greenback’.
USD may see a boost from jobless figures if they print as forecast later today. Claims for the week ending Feb 18 are expected to remain close to previous lows. The data could add to bets on further interest rate hikes from the Federal Reserve.
On the other hand, forecast cooler fourth quarter GDP figures could cap any gains for USD later today. Signs of weakness in the US economy could see investor confidence falter.
Crucial inflation data on Friday could prompt gains for the US Dollar, however. The core PCE price index, the Fed’s preferred measure of inflation, is set to tick higher in January. The figures could prompt increased rate hike bets.
Finally on Friday, speeches from multiple Fed policymakers could push USD higher if they signal further policy tightening at future meetings.
Will NI Protocol Negotiations Keep Pressure on Pound (GBP)?
The Pound (GBP) could continue to find support from bets on further action from the BoE today. Catherine Mann’s hawkish speech earlier today could continue to provide further positive impetus for Sterling.
Looking to the rest of the week, the latest consumer confidence figures on Friday could have a mild negative effect on GBP. February’s reading is expected to remain close to previous month’s lows.
A speech from BoE board member Silvana Tenreyro could prompt a pullback in BoE rate hike bets on Friday, however. Tenreyro is a notably dovish member of the central bank’s Monetary Policy Committee (MPC).
Sterling could see further headwinds from Brexit-related headlines this week. Markets will be watching the developing negotiations over the Northern Ireland Protocol.