GBP/USD Exchange Rate Softens ahead of US GDP
The Pound to US Dollar (GBP/USD) exchange rate is ticking lower so far this morning as investors brace for the latest US GDP release.
At the time of writing the GBP/USD exchange rate is trading at around $1.1594. Down roughly 0.4% from today’s opening rate.
US Dollar (USD) Poised to Rally on Positive GDP Print?
The US Dollar (USD) is mounting a recovery this morning as USD investors await the latest US GDP release.
Economists forecast this afternoon’s release will report the US economy grew by 2.4% in the third quarter. This is up from –0.6% in Q2 and would see the US rebound from a technical recession.
However, USD investors will likely remain wary of today’s release following the shock contraction in US GDP in both the first and second quarters. If there is another big miss in US GDP the US Dollar could fall sharply.
A weaker-than-expected growth reading may stoke speculation the Federal Reserve is preparing to slow the pace of future interest rate hikes. Concerns over which have been a key source of weakness for the US Dollar over the past week.
Also of note to USD investors this afternoon will be the latest US durable goods orders print. An expected rebound in order growth is likely to reflect positively on the US Dollar.
Pound (GBP) to Extend Recovery as Sunak Restores Fiscal and Political Credibility?
The Pound (GBP) has been on a tear against the US Dollar over the past week. The crowning of Rishi Sunak as the UK’s latest Prime Minister bolstering Sterling sentiment after it was battered under his predecessor.
The GBP/USD exchange rate is currently trading around 10 cents higher than it was when it struck a record low of $1.06 in late September.
Since becoming Prime Minister on Tuesday, Sunak has almost entirely dismantled Liz Truss’s legacy. Reversing most of her policy plans and removing many of her allies from his cabinet.
Truss’s time in office was marred by fiscal and political uncertainty, following the disastrous response to her government’s mini-budget.
GBP investors are hopeful that Sunak’s financial orthodoxy will help restore the UK’s fiscal and political credibility. Optimism over his premiership has even seen markets shrug off the recent delay to the government’s spending and tax plans.
Comments are closed.