The Pound-Dollar rate could extend gains if Andrew Bailey signals a November hike, while Kevin Warsh may drive fresh volatility in the Greenback.
The Pound US Dollar (GBP/USD) exchange rate pressed higher on Thursday as the UK’s latest GDP figures surprised to the upside.
At the time of writing, GBP/USD was trading at around $1.3251. Up roughly 0.4% from Thursday’s opening levels.
Pound to Dollar (GBP/USD): 1.324695 (+0.12%)
Dollar to Yen (USD/JPY): 158.17979 (+0.14%)
DAILY RECAP:
The Pound (GBP) The Pound (GBP) pushed higher across the board on Thursday after data showed the UK economy sustained modest growth through August.
Data published by the Office for National Statistics (ONS) reported monthly GDP inched up by 0.1% in August, beating consensus forecasts for a 0.1% contraction.
While this represented a visible deceleration from July’s 0.4% expansion, GBP investors welcomed the surprising resilience in the face of steep energy costs and a turbulent international climate.
The positive reading bolstered Sterling on two fronts, solidifying market expectations that the Bank of England (BoE) will finally join other central banks in raising interest rates in November, while providing Chancellor John Healey with a little more fiscal headroom for his inaugural Autumn Budget.
The US Dollar (USD) faced broad-based selling pressure on Thursday as a deepening sell-off in artificial intelligence (AI) stocks prompted investors to reassess their exposure to US financial markets.
This saw the ‘Greenback’ pullback sharply from the year-to-date struck on Wednesday as USD investors remained conscious that the AI rollout has underpinned much of the US’s economic momentum in recent weeks.
However, these losses were tempered somewhat at the start of the US trading session in response to stronger-than-expected domestic producer prices and consumer spending.
Near-Term GBP/USD Forecast: BoE Bailey and Fed Warsh in the Spotlight
Looking ahead to Friday’s session, direction in the Pound to US Dollar (GBP/USD) exchange rate is likely to be tied to speeches by BoE Governor Andrew Bailey and Fed Chair Kevin Warsh.
Bailey will speak first and could extend the upside in Sterling if he more explicitly signals that the BoE is preparing to restart its hiking cycle in November.
Meanwhile, with the odds of an October rate hike from the Federal Reserve’s still in flux, there’s the potential for Warsh’s speech to trigger some notable volatility in the US dollar, which is poised to skyrocket if the Chair of the US central bank should in any way signal that the door remains open for a potential hike this month.
Our currency coverage draws on live market data, official economic releases and published bank research.
