The Pound US Dollar (GBP USD) exchange rate was able to recoup much of Monday’s losses overnight yesterday as the ‘Greenback’ came under fire from a dovish Fed speech.
US Dollar (USD) Slides as Fed Policy Maker Suggests no Need for Immediate Rate Hike
The US Dollar was forced to relinquish some of its gains yesterday evening as St. Louis Federal Reserve President James Bullard suggested that the Fed won’t need to raise interest rates in the near-term.
Bullard said in his speech yesterday;
‘The current level of the policy rate is likely to remain appropriate over the near term.’
Explaining his reasoning Bullard said that US inflation is likely to remain weak for the foreseeable future despite a continued uptick in the US job market in recent months, going so far to suggest that even if unemployment fell from 4.3% to 3% that inflation is still unlikely to push past 1.8%.
Markets currently put the odds of another rate hike from the Fed this year at around 37% well below the 90% chance given by investors in June, when rates were last raised.
Pound (GBP) Faces More Brexit Uncertainty
Meanwhile the Pound continues to struggle this week as the currency is marred by further Brexit uncertainty.
The latest bump in the road comes as Lord Neuberger, Britain’s most senior judge pushes for clarity from the government on how UK law will be impacted by European Court of Justice legislation after the split from the EU as he warns UK judges can not be blamed for any misinterpretations if it is not clarified.
Markets fear that this will added another layer of complexity to the Brexit process, further hindering the government’s ability to a form cohesive front in negotiations.
GBP USD Forecast: Fall in US Job Openings to Weigh on Greenback?
Looking ahead the GBP USD exchange rate may advance later this afternoon as JOLT releases its latest US job openings figure for June, with analysts predicting that opening will have fallen slightly at the end of the second quarter.
Meanwhile the Pound may stumble on Thursday as economists forecast that the UK’s trade balance will have worsened in June, with the nation’s trade deficit expected to have risen from £3.07bn to £3.6bn.
However the most impactful data this week will likely be the US inflation report on Friday, with investors watching closely as a weaker reading is likely to cause the chances of another rate hike from the fed before the end of the year to plummet even further.
Current Interbank Exchange Rates
At the time of writing the GBP USD exchange rate was trending around 1.3031 and the USD GBP exchange rate was trending around 0.7674.
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