ExchangeRates.org.uk - At the time of writing GBP/USD was trading at around $1.2653, up roughly 0.2% from Thursday’s opening rate. The US Dollar (USD) slipped against the majority of its peers on Thursday after the US released its finalised GDP reading for the first quarter of the year. The US economy expanded by 1.4% in 2024’s first quarter, printing slightly higher than a previous 1.3% estimate, however, pointed to the lowest level of growth since the first two quarters of 2022.
The US Bureau of Economic Analysis (BEA) explained: ‘The increase in real GDP primarily reflected increases in consumer spending, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by a decrease in private inventory investment. Imports increased," the BEA explained in its press release.’
As such, the US Dollar weakened against its peers in the wake of the release. However, preventing any further USD losses were the latest durable goods orders and initial jobless claims for the week ending June 22, which both surprised to the upside.
Pound (GBP) Hobbled by UK Labour Data
The Pound (GBP) struggled to attract support on Thursday as it was undermined by concerns over the UK labour market. The latest mid-year labour market update, released by leading hiring company Indeed, reported that the UK jobs sector is cooling.
Jack Kennedy, Senior Economist at Indeed, commented: ‘The UK labour market has continued its adjustment in recent months, though it remains somewhat tight and still competitive for employers in many sectors. Tackling inactivity, a longer-term skills strategy and the role of immigration in addressing labour shortages will be agenda items for the elected government.’
With UK unemployment levels at an almost three-year high, further scrutiny over the overall health of the UK labour market undermined the Pound on Thursday, as it served to ramp up current Bank of England (BoE) interest rate cut bets for August. However, keeping GBP exchange rates afloat on Thursday was a bout of cheery trade. As an increasingly risk-sensitive currency, upbeat trading conditions saw the Pound stay above ground.
GBP/USD Forecast: US Core PCE Price Index in Focus
Looking ahead, the primary catalyst of movement for the Pound US Dollar exchange rate for the remainder of this week will likely be the publication of the latest US core PCE price index. As the survey stands as the Federal Reserve’s preferred measure on inflation, the data could infuse volatility into USD exchange rates. The index is forecast to cool from 2.8% to 2.6% in May, could this undermine the ‘Greenback’ at the end of this week? Turning to the Pound, the UK’s finalised GDP reading for the first quarter of 2024 is also schedule for release on Friday and could infuse volatility into GBP at the end of this week should the data print lower than expected.
This content was originally published on ExchangeRates.org.uk
