GBP/USD exchange rate muted ahead of US data
The pound US dollar (GBP/USD) exchange rate is trapped in a narrow range this morning ahead of the publication of the latest retail sales data from the US.
At the time of writing the GBP/USD exchange rate is trading at around $1.3210, virtually unchanged from this morning’s opening rate.
US dollar (USD) to slip following domestic retail sales?
The US dollar (USD) is struggling to garner investor attention this morning amid a data-light start to the session.
Further weighing on USD sentiment today is a bout of cheery trade, which has seen the safe-haven currency lose ground to its risker rivals.
However, USD sentiment remains largely muted ahead of some high impact data scheduled for release later today.
The latest US retail sales index is forecast to show a substantial decline in August, following July’s 1% surge, and is expected to contract by 0.2%.
Should the upcoming data release print as expected and confirm a large downturn in last month’s consumer spending, highlighting further economic worries in the US, the ‘greenback’ will likely falter against its peers a day ahead of the Federal Reserve’s upcoming interest rate decision.
Pound (GBP) to be undermined by CPI data?
The pound (GBP) is trading mostly flat this morning as a lack of UK data releases sees Sterling struggle to find a clear trajectory.
However, supporting GBP exchange rates this morning are current Bank of England (BoE) interest rate cut bets.
The BoE is widely expected to deliver a less aggressive policy easing cycle than other major central banks this week, which has buoyed the Pound thus far.
Michael Field, European Market Strategist at Morningstar, commented:
‘The chances of a further rate cut in September are slim, according to a recent poll of economists by Reuters, with almost all surveyed believing September is coming too soon after the recent rate cut. Markets seem to be pricing in one more rate cut, which is likely to come later in the year.’
However, looking ahead to Wednesday, the UK will release its latest consumer price index, which could undermine GBP exchange rates ahead of the central bank’s decision.
With both headline and core inflation forecast to cool in August, will this be enough to ramp up rate cuts bets just a day before the BoE’s meeting, and hobble GBP in the process?
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