The GBPUSD exchange rate has been trading lower this morning, as markets await the release of the US Core Personal Consumption Expenditures (PCE) price index. At the time of writing, the Pound Sterling was trading around $1.3390, down 0.2% from today’s opening price.
Questions over US Dollar stability after data release
The US dollar continues to trade in a mixed range this morning, gaining against some major currencies and falling against others, ahead of the release of important US data. Today, the Core Personal Consumption Expenditures (PCE) price index, which the Federal Reserve prefers to measure inflation, will release. Analysts expect the index to rise slightly from 2.6% to 2.7% compared to the previous month.
The US dollar has seen significant selling pressure this week, as the market anticipates that the Fed will cut interest rates by 50 basis points. However, if inflation data comes in strong and confirms the expected rise, we could see a rise in the value of the US dollar as a result of the decline in rate cut expectations. If the data miss expectations, the dollar could remain under pressure until the end of the week.
Pound Sterling awaits support from economic data
The pound has not shown a clear direction this morning, as it has seen volatility against most major currencies. Investors are showing caution ahead of the release of medium-term economic data later today. The Confederation of British Industry (CBI) retail sales survey is set to show improvement this month, with the index rising from -27 to -19. If the results match expectations and show a three-month high, this could support the pound. Conversely, if the figures fall, the pound could lose momentum amid the absence of another economic stimulus.
Pound Sterling falls against the dollar amid mixed expectations
The GBPUSD pair is under some pressure on Friday, as the US dollar strengthens. Meanwhile, bets on a large rate cut by the Federal Reserve in November are limiting the dollar’s gains. The Bank of England’s hawkish outlook is helping to limit the pair’s losses.
In the US session on Friday, the GBPUSD pair retreats from its highest levels since March 2022 around the 1.3435 area touched on Thursday, and drops below the 1.3400 level amid the rise in the US dollar. Despite this decline, major corrections seem to be far away.
The US dollar is witnessing some buying, recovering part of its previous losses, supported by repositioning operations ahead of the release of important US inflation data, such as the Personal Consumption Expenditures (PCE) price index. However, the growing bets on monetary policy easing by the Federal Reserve and the bullish trend in the markets are limiting the strength of the dollar as a safe haven.
Despite the statements of Fed officials rejecting significant monetary policy easing, markets are expecting a large cut in November. This expectation overshadows the positive US economic data released on Thursday, which prevents dollar speculators from making new bets, providing some support for the GBPUSD pair.
Meanwhile, global risk is boosted by hopes that interest rate cuts will support the global economy. Stimulus measures from the People’s Bank of China, such as the 7-day repo rate and reserve requirement ratio (RRR) cuts, are boosting investor appetite for riskier assets. The UK will likely cut rates more slowly than the US, which supports the pound and limits GBPUSD losses.
GBPEUR exchange rate steady ahead of economic data
At the moment, the pound is trading at around 1.1995 euros, indicating relative stability compared to this morning’s opening levels. Will the euro (EUR) see a decline after the economic sentiment index? The euro appears to be struggling to attract investors’ attention, as markets await the release of the latest economic sentiment index for the eurozone. The data is expected to show a slight decline, with forecasts predicting the index will drop from 96.6 to 96.5. If the results come in as expected and highlight continued economic pessimism in the region, this could lead to a broader decline in the euro exchange rate as the European session progresses today.
As for the pound (GBP), it is experiencing a mixed performance ahead of the CBI Distribution Deals Survey. It is trading steady against most currencies, with some areas slightly weaker, as it awaits the release of the survey results. The index is expected to improve from -27 to -19 in September. If the results come in as expected and confirm the best reading in three months, the pound is likely to strengthen its position against its peers by the end of the week.
GBPEUR Forecast: Focus on German Data
Looking ahead, economic data from Germany, the eurozone’s largest economy, will be the main factor driving the GBPEUR exchange rate movement over the coming days. The excitement begins with the release of August retail sales data, which could impact the start of next week’s euro trading, especially if it shows a decline in consumer spending. September’s inflation reading currently stands at 1.9%, just below the European Central Bank’s 2% target. If inflation slows further, it could boost the chances of an ECB rate cut, putting further pressure on the euro.
