Pound US Dollar (GBP/USD) Exchange Rate Slumps after Poor UK PMIs
The Pound US Dollar (GBP/USD) exchange rate is tumbling today following disappointing UK PMI data. A retreat in global risk appetite may be deepening losses for the pairing as the US Dollar attracts risk-off flows. On the other hand, the exchange rate may be underpinned today by buoyant UK retail sales.
Could Pound (GBP) Find Support from Upward GDP Revision?
A lack of significant data for the Pound (GBP) could leave the currency at the mercy of market forces in the coming week.
Sterling could face pressure from the Confederation of British Industry’s (CBI) latest distributive trades survey on Monday.
The gauge of retail sector health is expected to fall dramatically in March. Given the recent retail sales data however, the survey could surprise to the upside and bolster GBP.
GBP could find support from the final reading of fourth quarter GDP growth figures on Friday. The figures are expected to be revised higher to indicate a stagnation rather than a contraction. The reading may also bolster confidence in forecasts that the UK will dodge a recession in 2023.
Will Stagnation in Core PCE Price Index Weigh on US Dollar (USD)?
Looking to the coming week for the US Dollar (USD), any additional pullbacks in global risk appetite could bolster the safe-haven ‘Greenback’. Poor private sector data for the UK and Eurozone has added to fears of a recession, as well as jitters in the global banking sector.
The US Dollar could be pulled lower by an eleventh consecutive month of contraction in the US manufacturing sector. March’s reading of the Dallas Fed manufacturing index is set to print at -10.
USD could see a boost from the latest jobless claims figures on Thursday. Claims for the week ending March 25 are forecast to print close to the previous week’s lows, which investors may take as an indicator of a still-tight labour market.
On the other hand, a downward revision in fourth quarter GDP growth figures could cap any gains for the US Dollar.
USD investors will be most closely watching the latest reading of the core PCE price index on Friday. The Fed’s preferred measure of inflation is expected to remain unchanged in February. The figures could add to bets on a slowdown in policy tightening from the US central bank and weigh in the US Dollar.
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