The pound US dollar (GBP/USD) exchange rate is trending higher this morning ahead of some high-impact Federal Reserve commentary due this week.
At the time of writing the GBP/USD exchange rate is trading at around $1.3001, up approximately 0.2% from this morning’s opening rate.
US dollar (USD) pressured by firming Fed rate cut bets
The US dollar (USD) is largely subdued this morning after staging a modest recovery in the wake of some dovish Fed remarks.
Looking ahead, Fed policymakers Raphael Bostic and Michael Barr are due to speak this evening. Should either policymaker echo the central bank’s increasingly dovish tilt, the ‘greenback’ may be left on the back foot once again, as investors place their bets on an aggressive monetary loosening cycle in the months ahead.
On Wednesday, the publication of the Fed’s latest meeting minutes could fuel notable USD volatility. Should the minutes indicate a preference for looser monetary policy amongst rate-setters, USD could tumble against its rivals.
Thursday sees the release of the latest initial jobless claims report. A modest uptick in the number of newly unemployed US citizens claiming unemployment benefits may weigh on the ‘greenback’, reinforcing concerns of a deteriorating American labour market.
Also due out on Thursday are the latest preliminary PMIs in the US. A forecast slowdown in the vital services sector could serve to deter investor interest in the US dollar, while ongoing contractions in the manufacturing sector may further sour USD sentiment.
The focus for USD investors this week arrives on Thursday evening as the Fed’s annual summit kicks off. The Jackson Hole Symposium will see policymakers gather to discuss monetary policy. Notably, Fed Chair Powell is due to deliver a keynote speech which will be closely watched for hints regarding US monetary policy.
Pound (GBP) wobbles amid data lull
The pound (GBP) struggles to find a clear direction this morning amid a data-light start to the week.
Looking ahead, British releases are sparse until Thursday, when the latest preliminary PMIs are due out in the UK.
The manufacturing index is due to print at 51.2 for a second consecutive month, while services activity is due to accelerate again in August, modestly lifting the index to 52.8. Should the data print in alignment with market expectations, signs of continually robust growth in the UK’s private sectors may bolster GBP.
As the week nears an end, Bank of England (BoE) Governor Andrew Bailey is due to speak at the Jackson Hole Symposium in Wyoming. Should Bailey strike dovish, ramped-up BoE rate cut bets could dent GBP exchange rates.
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