GBP/USD exchange rate flat following UK PMIs
The pound US dollar (GBP/USD) exchange rate is trapped in a narrow range this morning following the publication of the UK’s latest services PMI.
At the time of writing the GBP/USD exchange rate is trading at around $1.2704, virtually unchanged from this morning’s opening rate.
FOMC minutes to undermine US dollar (USD)?
The US dollar (USD) is treading water against the majority of its peers this morning as markets await the publication of the minutes from the Federal Reserve’s latest interest rate decision.
At its June meeting, the Fed left rates on hold, but signalled it expects to only cut rates a single time in 2024.
However, following dovish comments from Fed Chairman Jerome Powell on Tuesday, fed into market expectations for at least two cuts before the end of the year.
Tonight’s meeting minutes could see USD exchange rates slip further should the notes also point to a dovish consensus.
Before that, the US will release its latest ISM services PMI, which is forecast to remain in expansion territory (a reading over 50) which could buoy the ‘Greenback’ in mid-week trade.
Pound (GBP) to remain flat ahead of election?
The pound (GBP) is trading sideways against the majority of its peers this morning following the publication of the UK’s finalised services PMI for June.
Although the survey came in below preliminary estimates, falling from 52.9 to 51.1 in June, the index remained in expansion territory.
Joe Hayes, Principal Economist at S&P Global Market Intelligence said:
‘Prices still continue to show a high degree of stickiness across the UK service sector, although input cost inflation once again trended lower in June.’
However, despite the continued expansion of the sector, GBP remained flat ahead of the UK’s upcoming general election.
Polls open in less than 24 hours, leaving GBP investors reluctant to place any aggressive bets so close to election day.
Kier Starmer’s Labour party is largely seen as the favourites to win tomorrow. Markets are receptive to the party’s commitment to fiscal responsibility, but any surprises could rock GBP exchange rates at the end of this week.
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