December 18, 2024 – Written by James Fuller
STORY LINK Pound to Dollar Rate Unchanged following Upbeat US and UK Data
The Pound US Dollar exchange rate was largely subdued on Tuesday following the release of some better-than-expected economic data from both the UK and the US.
On Tuesday, the Pound (GBP) gained ground against many of its major trading partners following the release of the UK’s latest employment figures.
The unemployment rate for the three months ending in October stayed at 4.3%, matching what the market had anticipated.
One of the most notable developments was the average earnings index (excluding bonuses), which increased from 4.9% to 5.2%, surpassing the expected 5% reading.
This unexpected rise in wage growth reduced the likelihood of an interest rate cut by the Bank of England (BoE), which bolstered the Pound’s performance on Tuesday.
On Tuesday, the US Dollar (USD) firmed against most of its counterparts following the release of the country’s latest retail sales data.
The retail sales index for November increased from 0.5% to 0.7%, exceeding the modest expectation that it would remain unchanged, indicating strong consumer spending in the US.
The positive data, combined with a risk-off market sentiment, bolstered the USD’s position as a safe-haven currency, leading to gains against the majority of its peers.
Looking forward to Wednesday, the main driver of movement for the Pound US Dollar exchange rate will likely be the Federal Reserve’s upcoming interest rate decision.
With a 25-basis point cut widely anticipated, USD investors will be closely watching the Fed’s forward guidance.
If any Fed officials signal a dovish stance on future monetary policy, USD exchange rates could weaken during mid-week trading.
In the UK, November’s consumer price index (CPI) is expected to show an increase in both headline and core inflation.
If the data aligns with these expectations, it could offer further support to the Pound, potentially strengthening GBP exchange rates by further diminishing the likelihood of interest rate cuts by the Bank of England.
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TAGS: Pound Dollar Forecasts
