On the other hand, softer Fed bets could dampen enthusiasm for USD amid the signs of slack in the US labour market.įor the Pound, bets on further rate hikes from the BoE could keep the currency buoyed over the remaining part of the week.1Exchange rates fluctuate, at times significantly, and you acknowledge and accept all risks that may result from such fluctuations. The US Dollar could find further support if risk tone remains cautious. Neither currency will see any data releases over the rest of the week. GBP/USD Exchange Rate Forecast: Will Softer Fed Bets Weigh on USD? A survey released by the Recruitment and Employment Confederation (REC) outlined a drop in starting salary growth, as well as a five-month low in demand for new staff. On the other hand, GBP’s gains were stymied by signs of slack in the UK labour market. That's not a good look for the pound but it should also be no surprise that markets are still pricing close to another 100 basis points of BoE tightening over the coming months to combat price gains.’ ‘Sticky prices are impacted by high imported items costs. Speaking on the data, Shaun Osborne at Scotiabank said: The OECD predicted that the UK will have the highest inflation of any major economy in 2023. The Pound (GBP) edged higher on Thursday as markets continued to price in further policy tightening from the Bank of England.īoE bets remained elevated after forecasts from the Organisation for Economic Co-operation and Development (OECD) released on Wednesday. The longer you postpone that decision, the harder it is going to be to bring inflation lower.’ Pound (GBP) Exchange Rates Firms amid BoE Rate Hike Bets ‘The longer they don't hike, the longer the economy is going to continue expanding above trend. On the other hand, some experts expressed their fear that leaving interest rates unchanged could make the Fed’s mission to reduce inflation even more difficult. He's going to stick with that as it gives them an additional month of data to look at, although I seriously doubt whether that will give them any new insights.’ ‘Powell expressed his bias in favor of remaining on hold in June. More than 90% of the economists questioned agreed that the Fed would keep interest rates unchanged at its meeting next week. A poll conducted by Reuters and released on Wednesday confirmed that the majority of economists surveyed support this theory. Markets have been continuing to price in a rate hike hold from the Fed at their June meeting. Overall this could dampen the probability of a hike for the June FOMC Meeting.’ While it only represents a single data point, this could be signalling a softening in a labour market which has been very resilient to interest rate hikes to date. ‘Today’s figures came in higher than expected at 261k – the highest print in well over a year. Ryan Brandham, head of Global Capital Markets for North America at Validus Risk Management, said: Markets took the figures as an indicator the that the US labour market, a key driver in the Fed’s interest rate decisions, may be cooling. Jobless claims leaped to 261,000 on Thursday, their highest point since October 2021. USD’s losses were cushioned by a risk-off mood, though. USD’s decline came after an above-forecast rise in US jobless claims for the week ending 03 June. US Dollar (USD) Exchange Rates Tumble after Above-Forecast Jobless Claims Rise The pairing was bolstered by a greater-than-forecast rise in US jobless claims which prompted a pullback in Federal Reserve rate hike bets.Įxpectations of additional policy tightening from the Bank of England (BoE) also lifted GBP/USD.Īt time of writing the GBP/USD exchange rate was at around $1.2533, which was up roughly 0.7% from that morning’s opening figures. The Pound US Dollar (GBP/USD) exchange rate strengthened on Thursday.
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