Pound US Dollar Exchange Rate Firms

The Pound US Dollar (GBP/USD) exchange rate ticked up on Tuesday following the release of the latest durable goods orders from the US.

At the time of writing GBP/USD was trading at around $1.2642, up roughly 0.2% from Tuesday’s opening rate.

US Dollar (USD) Holds Steady despite Optimistic Data Release

The US Dollar (USD) ticked lower against the majority of its peers on Tuesday following the release of the latest domestic durable goods orders.

The data showed that durable goods orders in the United States expanded by 1.4% in February, skyrocketing past last month’s downwardly revised -6.9% figure, and ahead of market expectations it would only rise by 1.1%.

This marked the first growth level in a three-month period, however the data wasn’t enough to buoy USD exchange rates in the aftermath of the release.

Keeping the ‘Greenback’ on the defensive on Tuesday was an upbeat market mood. Due to its position as a safe-haven currency, an improvement in risk appetite set to temper USD’s trade.

Pound (GBP) Muted amid Lull in Data

The Pound (GBP) was trapped in a narrow range against the majority of its peers on Tuesday as an absence of macroeconomic data releases left Sterling struggling to find a clear direction.

Amid a lack of impactful data, GBP investors turned to the latest food inflation data released earlier on Tuesday.

The data revealed that grocery price inflation slowed in March, to 4.5%, making it the lowest level since February 2022. The index also revealed that one in four households are still struggling financially, meanwhile supermarkets like Waitrose and

Ocado gain more customers.

Fraser McKevitt, the head of retail and consumer insight at Kantar, commented:

‘Grocery inflation has come down significantly since hitting an eye-watering peak of 17% in March 2023. However, despite this continued slowdown, many British households are still feeling the squeeze. Twenty-three per cent identified themselves as struggling financially in our data – the same proportion as reported in November last year.’

However, the increasingly risk-sensitive pound was cushioned by an improving market mood.

GBP/USD Forecast: Influx of US Data to Bolster the US Dollar?

Looking ahead, the primary catalyst of movement for the Pound US Dollar exchange rate this week is likely to be an inflow of upcoming US data releases.

On Thursday, the US dollar could face fresh selling pressure as the latest US labour data is expected to show that US jobless claims have increased during the week ending March 23.

Also on Thursday, the US is set to publish its finalised GDP figures for the final quarter of 2023. If this confirms an expansion in the US economy, the ‘Greenbank’ could rise as a result.

On Friday, the Federal Reserve’s preferred measure of inflation, the core PCE price index, is forecast to hold steady at 2.8%. Any deviation from the predicted results could infuse volatility into USD exchange rates at the end of the week.

Turning to the Pound, the likely driver of movement this week will be the UK’s finalised GDP data for the fourth quarter of 2023.

The figures are expected to confirm that the UK economy fell into a technical recession in the second half of 2023, which may undermine GBP exchange rates towards the latter stages of the week.