GBP/USD Exchange Rate Dips on Fed Rate Outlook
The Pound US Dollar (GBP/USD) exchange rate is trending lower this morning as markets digest the Federal Reserve’s latest rate decision.
At the time of writing the GBP/USD exchange rate has fallen around 0.4%, leaving the pairing down around half a cent from Wednesday’s best levels.
US Dollar (USD) Exchange Rates Strengthens as Fed Sticks to Dot Path
The US Dollar (USD) is pushing higher in currency markets this morning, in the wake of yesterday’s rate decision by the Federal Reserve, which saw the US central bank raise interest rates for a third time this year.
With the move being priced in well in advance, the hike itself proved to have limited impact on the US Dollar, with the currency’s gains instead being driven by the bank’s robust policy outlook.
Despite the Fed indicating it was not expecting any more upside surprises with Inflation, the Fed appeared happy to stick to its existing ‘dot path’ which will see the bank raise interest rates at least four more times over the next twelve months.
Pound (GBP) Exchange Rates Dependant on Carney Outlook
Meanwhile the Pound (GBP) is showing limited movement this morning as markets await a speech by Bank of England (BoE) Governor Mark Carney later this afternoon.
This will be Carney’s first speech since the EU’s rejection of Theresa May’s Chequers plans last week, which stoked fears of a no-deal Brexit.
Carney has previously warned that a chaotic exit from the EU could deliver a major financial shock to the UK economy, even going so far to compare it to the 2008 crash.
Given the risks of a no-deal Brexit have only risen in the past couple of weeks, this could led to an even more dovish tone from Carney today. Something which would likely weaken hopes of a BoE rate hike in May and propel the Pound lower.
GBP/USD Exchange Rate Forecast: Rebound in US Goods Orders to Bolster USD?
Also coming up this afternoon will be the release of the latest US durable goods figures.
The release is expected to put further pressure on the Pound US Dollar (GBP/USD) exchange rate as economists forecast US goods order growth will have rebounded from -1.7% to 2% in August.
Meanwhile looking past Carney’s speech, Sterling could find some stable footing at the very tail end of the week, with the release of the UK’s final GDP figures for the second quarter expected to confirm Britain’s economy expanded at a robust 0.4%.
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