Pound US Dollar (GBP/USD) Exchange Rate Rangebound amid Risk-On Sentiment
The Pound US Dollar (GBP/USD) exchange rate steadily climbed earlier today, but has since dropped close to its opening figures. Political turmoil in the UK has placed pressure on the Pound (GBP) whilst recovering risk-sentiment may have undermined the US Dollar (USD).
At time of writing the GBP/USD exchange rate is at around $1.3452, virtually unchanged from this morning’s figures.
Pound (GBP) Trades Sideways as PM Johnson Continues to Battle Calls for Resignation
The Pound (GBP) has traded narrowly against many of its safer rivals today as Sterling continues to face headwinds from the UK political sphere. An above forecast rise to January’s retail sales may have helped prevent drastic losses for Sterling however.
Data collected by the British Retail Consortium (BRC) showed that sales rose by 8.1% in January 2021 compared with the previous year.
Analysts at the BRC were quick to highlight that the prior year’s sales were affected by a country-wide lockdown, and that record-high inflation may account for a significant portion of sales growth.
Calls for Prime Minister Boris Johnson’s resignation have continued unabated this week. The PM has once again come under fire for his conduct in the House of Commons last week.
His comments toward Kier Starmer were reported to have been picked up by protesters who swarmed the opposition leader on Monday.
US Dollar (USD) Edges Higher amid Rise in Bond Yields
The US Dollar (USD) has ticked upward against a handful of its rivals today. Continued expectations of a faster than expected tightening of monetary policy by the US Federal Reserve has helped boost US bond yields.
USD traders have been betting on an increasing number of rate hikes from the Fed in 2021. Federal Reserve officials have been slightly more cautious, citing a need to watch data for signs of how inflation might react.
Atlanta Federal Reserve Chief Raphael Bostic had the following to say:
‘If the data say that things have evolved in a way that a 50 basis point move is required or would be appropriate, then I’m going to lean into that. If moving in successive meetings makes sense, I’ll be comfortable with that.’
The US Dollar may have been further supported by a smaller than expected rise to the US trade deficit. The deficit rose to -$80.7B versus expectations of -$83B with both imports and exports rising as well.
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