Category: Forex News

GBP/USD To Outperform This April?

By Published On: April 11, 20243.5 min readViews: 2160 Comments on GBP/USD To Outperform This April?

The Pound to US Dollar (GBP/USD) exchange rate traded in a wide range last week as a multitude of mixed US data releases infused volatility into the currency pairing.

At the time of writing the GBP/USD was trading at around $1.2750, virtually unchanged from Friday’s opening levels.

US Dollar (USD) Exchange Rates Hit Multi-Month Highs

The US Dollar (USD) started the week off strong, hitting multi-month highs against the majority of its peers after the latest ISM manufacturing PMI beat forecasts, and showed a return to growth for the first time in 16 months.

However, on Tuesday, The US Dollar fell amid profit-taking, as investors cashed in on the currency after it hit its highest level since 14 November.

In the afternoon, the latest US jobs openings figure failed to lift the ‘Greenback’ despite beating forecasts, as USD exchange rates remained on the back foot.

On Wednesday, the US dollar slumped after the latest ISM services PMI data printed below market expectations.

The data reported a slowdown in growth levels rather than a slight expansion as previously expected, which saw the US dollar suffer notable losses.

On Thursday, the ‘Greenbank’ extended its downside in the wake of dovish comments from Federal Reserve Chair Jerome Powell.

foreign exchange rates

USD also faced further selling pressures in the afternoon, as the latest initial jobless claims figure rose more than expected.
The US Dollar ended the week surging against the majority of its peers following the release of the latest domestic non-farm payrolls data.

March’s figure skyrocketed past expectations, coming in at 303,000 new jobs created in March, well above predictions of a more modest 200,000.

Furthermore, the latest unemployment figures for March remained unchanged at 3.8% rather than rising to 3.9% as predicted, which lent the ‘Greenbank’ further support.

Pound (GBP) Exchange Rates Fluctuate amid Minimal Data

The Pound (GBP) began the week trading in a narrow range against the majority of its peers as a lack of economic data left Sterling trading without a clear direction.
However on Tuesday, Sterling enjoyed some modest support after the UK’s final manufacturing PMI was revised up from 49.9 to 50.3.
Although the data was only slightly above the 50 point that marks expansion, it was still the first positive PMI reading since July 2022 which served to lift GBP exchange rates in the aftermath of the release.

However on Thursday, the Pound slipped against its peers following the UK’s final services PMI data for March. The latest figure was revised lower, and came in at 53.1, marking a faster-than-forecast slowdown in service sector activity, which ultimately dampened Sterling sentiment.

The Pound closed the week trading without a clear direction again as a lack of economic data left GBP investors speculating that the Bank of England (BoE) could start cutting interest rates in June, which further undermined GBP.

GBP/USD Forecast: Influx of US data to infuse Volatility in the US Dollar?

Looking ahead, the primary driver of movement for the Pound US Dollar exchange rate this week is likely to be an inflow of US macroeconomic data.

The latest US headline and core inflation data for March is scheduled for release on Wednesday and is forecast to slightly cool. Should the data print as expected, this may undermine USD exchange rates in mid-week trade.

Also scheduled for release on Wednesday are the Federal Reserve’s latest interest rate decision meeting minutes. Any further guidance on monetary policy could infuse volatility in the ‘Greenbank’.

On Thursday, the latest domestic PPI data for March is forecast to fall from 0.6% to 0.3% which could hobble to American currency towards the latter stages of the week.

Turning to the Pound, the theme of minimal data will continue into this week and may leave GBP exchange rates struggling to find a clear trajectory for the majority of the week.

The one data release of note will come in the form of the UK’s latest GDP print for February, expected at the end of the week.

The data is forecast to report a contraction of 0.3% following a previous reading of 0.2%, which could see GBP exchange rates struggle to catch bids on the back of renewed concern over the overall health of the UK economy.

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