GBP/USD Slumps with Data in Short Supply
The Pound US Dollar (GBP/USD) exchange rate wavered today with both UK and US data in short supply.
At the time of writing the GBP/USD exchange rate is trading at around $1.2705, down approximately 0.2% from this morning’s opening rate.
US Dollar (USD) Wavers amid Data Lull
The US Dollar (USD) edged higher this afternoon despite a larger-than-expected contraction in the latest Dallas Fed manufacturing index.
USD’s upside seemingly came from escalating geopolitical tensions in the Middle East, which bolstered oil prices, and thereby boosted ‘Greenback’ sentiment.
Looking ahead, USD may see a volatile week of trade. On Tuesday, the latest JOLTs job openings data is expected to report that the new number of US jobs created in December will have fallen from 8.79 million to 8.75 million.
Should the data print in line with economists’ expectations, renewed signs of loosening within the US labour market may serve to reinforce market speculations of Fed rate cuts as soon as March this year.
On Wednesday, the Federal Reserve is due to deliver its latest monetary policy update. While the central bank is widely expected to keep interest rates on hold this month at 5.5%, investors will likely be looking to the accompanying Fed press conference for any forward guidance. A cautiously dovish hold may see USD plummet, amid signs of imminent rate cuts within the first quarter of 2024.
On Thursday, the latest ISM manufacturing PMI may further sour USD sentiment, with a forecast reading of 47 in January, down from 47.4 in the previous month.
Friday will then see the release of the highly impactful non-farm payrolls. A significant decline in January to 180,000, alongside an expected uptick to 3.8% in US unemployment may see the ‘Greenback’ left rudderless as the week draws to a close.
Pound (GBP) Quiet amid Data Lull
The Pound (GBP) is quiet this afternoon as a lack of fresh economic data leaves Sterling vulnerable to ongoing economic pessimism in the UK.
Notable data remains in short supply until the latter part of the week until the Bank of England’s vital monetary policy update due on Thursday.
Much like its US counterpart, wide expectations of a continued hold on interest rates will place the central bank’s accompanying commentary in the foreground, with any hawkish BoE comments likely to buoy Sterling.
In the meantime, GBP may be left vulnerable to changes in market sentiment. An persistently upbeat mood could lend the increasingly risk-sensitive Pound some support, however a shift towards gloomy trade could see GBP falter.
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