The Pound To Dollar News: GBP/USD Muted Despite Forecast-Beating UK Data
The Pound was trapped in a narrow range against the US Dollar on Tuesday despite the release of some positive UK data.
The Pound Dollar (GBP/USD) exchange rate was trapped in a narrow range on Tuesday despite the release of some positive UK data.
At the time of writing, GBP/USD was trading at approximately $1.2368, virtually unchanged from the start of Tuesday’s session.
On Tuesday, the Pound (GBP) struggled to gain traction and lost ground against many of its major counterparts despite the release of some better-than-expected domestic data in the UK.
The British Retail Consortium (BRC) reported that retail sales for January increased by 2.5%, far exceeding the anticipated 0.2% growth.
Despite this positive development, the Pound continued to face pressure against most of its peers.
This was partly due to a statement from Bank of England (BoE) official Catherine Mann, also released on Tuesday.
Mann, known for her hawkish views, was one of two Monetary Policy Committee (MPC) members who voted for a larger 0.5 basis-point interest rate cut at the BoE’s previous meeting.
In an interview with the Financial Times, Mann elaborated on her decision, highlighting a weakening jobs market and declining consumer demand as critical factors.
This saw the increasingly risk-sensitive Sterling adopt a defensive stance on Tuesday, even as the market mood remained optimistic and despite the UK’s positive data report.
On Tuesday, the US Dollar (USD) had a tough time attracting buyers and fluctuated against most of its peers, as a lack of US data releases left the ‘Greenback’ sensitive to the market’s changing mood.
Given its status as a primary safe-haven currency, the upbeat market mood on Tuesday reduced demand for the USD, keeping it largely on the defensive.
Additionally, US investors were likely hesitant to make any significant moves on the US Dollar ahead of Federal Reserve Chair Jerome Powell’s testimony before Congress, which was scheduled for the latter part of Tuesday’s European session.
Looking ahead, the main driver of movement for the Pound US Dollar exchange rate on Wednesday will likely be the release of significant data from the US.
The US is set to publish its latest consumer price index (CPI), which could inject fresh volatility into USD exchange rates, particularly if the inflation data shows a cooldown.
This could increase bets on interest rate cuts by the Federal Reserve and in turn dent the ‘Greenback’ during mid-week trade.
As for the Pound, the UK will not be releasing any new data on Wednesday, so GBP exchange rates may struggle to find a clear direction.
John Cameron
Contributing Analyst
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