GBP/USD exchange rate muted amid data-light calendar
The pound US dollar (GBP/USD) exchange rate is trapped in a narrow range this morning amid a lack of both UK and US data releases.
At the time of writing the GBP/USD exchange rate is trading at around $1.2975, virtually unchanged from this morning’s opening rate.
US dollar (USD) to waver following PMI release?
The US dollar (USD) is managing to gain ground against the majority of its peers this morning as a cautious market mood as well as ‘trump trade’ bolsters the safe haven ‘greenback’.
Odds that former President Donald Trump will win a second term as President in November’s election have risen to over 60% today, bolstering the US dollar on the back of investor belief in future tax cuts which could make it harder for the Federal Reserve to cut US interest rates.
Furthermore, risk-off flows are also underpinning the American currency thanks to its status as a safe-haven currency.
Looking ahead, the US dollar could experience fresh selling pressure tomorrow as the US’s latest PMIs are scheduled for release.
The data is expected to paint a mixed picture, with the country’s manufacturing sector forecast to remain firmly in the contraction zone (a reading blow 50) while the services sector is expected to remain in the expansion zone (a reading over 50).
Should the data print as expected, this could see USD lose ground against its counterparts on Thursday.
PMIs to bolster the Pound (GBP)?
The pound (GBP) is trapped in a narrow range this morning as a lack of economic data releases coupled with concerns over the UK’s upcoming Autumn Budget are undermining Sterling sentiment this morning.
However, looking ahead, the pound is likely to firm tomorrow as the UK will publish its own PMI data for October.
If the latest services index indicates that the sector not only stayed in expansion territory, but also picked up pace this month, GBP exchange rates could strengthen towards the end of the week.
Likewise, the UK’s manufacturing index is also expected to remain in the expansion, which could provide further buoyancy for Sterling should the data match expectations.
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