"Softer activity data could weaken the dollar a bit this month," he added. ING's American economist, James Knightley, believes it was. As for the former, the big question is whether the rebound in US activity data for January (payroll, retail sales, etc.) was largely weather-related and seasonal adjustment.” Chris Turner, Head of FX Research at ING Bank, said, “The main focus will be on US activity data and the FOMC meeting. If this prediction is correct, GBP/USD could find itself supported above 1.20 this week. For his part, Jonas Goltermann, deputy chief market economist at Capital Economics, says: “A return to a measured pace of job growth, in line with what we and most other forecasters expect, is likely to extract some strength from the dollar’s recovery.” ![]() ![]() Likewise, weaker-than-expected readings could punish the dollar, providing GBP/USD some near-term support. Readings above consensus may encourage dollar bulls. The dollar found favor again after a series of US economic reports revealed that the economy was strong enough to continue generating above-target inflation levels, necessitating further rate hikes at the Fed.ĭata remains in the driving seat and key near-term events that could lead to higher dollar volatility include the Fed's decision on March 22, US payroll data on March 10, and CPI inflation on March 14. ![]() For his part, Bilal Hafeez, head of research at Macro Hive, says: “We are in the camp that the Fed will raise it more than most investors think, which may maintain support for the dollar.”Īll in all, the pound-to-dollar exchange rate (GBP/USD) is now down for 2023 after falling 2.45% in February in a move that reversed January's advance of 1.87%. The assessment comes after the dollar rebounded in February as investors realized that the Federal Reserve would need to raise interest rates more than they expected at the start of the year. Research by ING Bank shows that the GBP/USD exchange rate may in fact fall to a four-month low during March, but a more sustained recovery is still expected towards the end of the year. The market's reaction to the testimony of Jerome Powell, Governor of the US Central Bank, was strongly supportive of the downward path of the GBP/USD pair, as it fell to the 1.1822 support level, the lowest for the currency pair in four months, which confirms these negative expectations for the performance of the pound sterling. The pound has now tumbled against the dollar for 2023 thanks to the sharp drop in February, and some analysts say further declines below 1.20 are possible over the coming weeks.
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