Pound To Dollar Week Ahead Forecast, News: GBP Trades Near Five-Month Low
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Pound Sterling (GBP) traded in a wide range against the US Dollar (USD) as an influx of macroeconomic data releases coupled with escalating tensions in the Middle East saw the currency pairing experience volatility. The Pound to US Dollar (GBP/USD) exchange rate traded in a wide range last week as an inflow of both UK and US data releases coupled with escalating tensions in the Middle East saw the currency pairing fluctuate. The GBP/USD was trading at around $1.2450, virtually unchanged from Friday’s opening levels. The US Dollar (USD) started the week firming against the majority of its peers as tensions escalated in the Middle East following reports of a drone strike from Iran onto Israel. On Tuesday, USD held strong and traded near a five-month high against many of its counterparts as an anxious market mood kept the safe-haven currency afloat. On Wednesday, the US Dollar faced resistance as there was a modest pullback in US Treasury yields. On Thursday, better-than-forecast US jobless claims supported the ‘Greenback’. Following reports that Israel enacted a drone and missile attack on the Iranian city of Isfahan, escalation in the conflict in the Middle East sapped the market mood, underpinning the safe-haven currency. Pound (GBP) began the week trading mostly flat against the majority of its peers following the publication of the UK’s latest jobs data on Tuesday, which showed a jump in unemployment. In February, the unemployment rate increased to 4.2% from an upwardly revised 4% reading in January. Furthermore, wage growth cooled in the three months leading up to February, with the reading printing at 6%, down from a previous 6.1%. Both figures served to undermined Sterling sentiment on Tuesday on the back of increasing bets that the Bank of England (BoE) will cut interest rates in the summer. On Wednesday, the pound enjoyed some modest support following the publication of latest UK Consumer Price Index (CPI). Both headline and core inflation levels cooled less-than-expected for March’s reading. The pound closed the week firming against the majority of its peers despite the release of underwhelming UK retail sales figures. Looking ahead, the primary driver of movement for the GBP/USD exchange rate this week is likely to be an array of US macroeconomic data. On Tuesday, the US will release its latest S&P Global manufacturing and services PMIs. With both sets of data expected to have slightly ticked up, USD may catch bids early this week. Moving into Wednesday, the latest domestic durable goods orders are forecast to plummet. On Thursday, the latest US GDP data for the first quarter of 2024 is also expected to show a large downturn which may see USD exchange rates weaken. Moving into Friday, the latest core PCE price index is forecast to decrease. Turning to the Pound, a data-light week may mean that Sterling struggles to find a clear trajectory for the majority of the week, which could leave GBP exchange rates vulnerable to the ever-shifting market mood. The only data release of note this week will come in the form of the UK’s latest flash manufacturing and services PMIs for April.
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