ExchangeRates.org.uk - At the time of writing the GBP/USD was trading at around $1.2890, up roughly 0.2% from Friday’s opening levels. The Pound (GBP) began the week mostly muted against the majority of its peers as a lack of economic data saw Sterling sentiment remain largely flat. However, on Tuesday, GBP ticked up against its peers following the publication of the UK’s latest jobs report. In the three months leading to June, UK unemployment came in lower than expected in June while average earnings (excluding bonuses) printed much higher than initial forecasts. This served to underpin the Pound on Tuesday as it significantly dampened Bank of England (BoE) interest rate cut bets for September. On Wednesday however, the Pound experienced headwinds as the UK’s latest inflation data revived BoE rate cut bets. The UK’s CPI (consumer price index) in July showed overall cooling in UK inflation figures, which saw GBP slump against its peers. However, the Pound was able to claw back some of its losses on Thursday following the UK’s GDP reading for the second quarter of 2024. The data showed another solid expansion, coming in at 0.6%. On Friday, Sterling continued on its upward trajectory following a 0.5% recovery in the UK’s retail sector, closing the week on the front foot against its peers.
US Dollar (USD) Undermined by Domestic Data
The US Dollar (USD) struggled to garner investor attention at the start of the week as a risk-on mood sapped the safe-haven currency’s appeal. On Tuesday, a larger-than-expected decline in the latest US producer price index (PPI) ramped up expectations that US inflation is cooling, undermining the ‘Greenback’ just a day ahead of the US’s latest inflation data. Moving into mid-week trade, the US’s latest consumer price index (CPI) confirmed that US inflation had in fact cooled, ramping up Federal Reserve interest rate cut bets further. However, on Thursday, USD managed to rebound following a stronger-than-expected rebound in US retail sales. The index rose by 1% in July, which lent the US Dollar some modest support in the wake of the release. On Friday, the latest US Michigan consumer sentiment index missed forecasts which saw USD close the week on the back foot.
GBP/USD Exchange Rate Forecast: FOMC in the Spotlight?
Looking ahead, the primary driver of movement for the Pound US Dollar exchange rate this week is likely to be the publication of the Federal Reserve’s latest meeting minutes. Although the central bank kept rates unchanged for an eighth consecutive time this month, USD investors will look to the latest meeting minutes for any guidance surrounding the possibility of a September interest rate cut. Any dovish comments from Fed officials could see big swings in GBP/USD during the middle of the week. Turning to the Pound, data will be largely absent for the majority of the week, which could see GBP exchange rates trade without a clear trajectory until the publication of the UK’s latest PMIs on Thursday. Any divergence from the forecasted reading could see the Pound US Dollar exchange rate waver on Thursday, alongside the publication of America’s own PMI data. At the end of the week, Federal Chair Jerome Powell will deliver a keynote speech at the Jackson Hole Symposium, which could infuse significant volatility into markets should he touch upon the US’s own monetary policy.
This content was originally published on ExchangeRates.org.uk
