Pound US Dollar Exchange Rate News: GBP/USD falls Ahead of US Inflation Release

Modified: Thursday, 10 March 2022 11:35 BST - Written by John Cameron

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD falls Ahead of US Inflation Release

GBP/USD Slips in Anticipation of US Inflation Data

The Pound US Dollar (GBP/USD) exchange rate is tumbling this morning as US investors await the publication of the US consumer price index.

At the time of writing, the GBP/USD exchange rate is trading at approximately $1.3150, down roughly 0.3% from today’s opening levels.

US Dollar (USD) Rises as Investors Await Inflation Rate Data

The US Dollar (USD) is trading higher against the Pound (GBP) today as investors await the publication of US inflation data.

February’s CPI figures are expected to report US inflation accelerated to 7.9%, significantly higher than January’s 7.5%.

If this prints true, it will be the highest inflation reading since 1982, and could reignite concerns over global inflation pressures.

A strong inflation reading data will also support a 25-basis-point rate hike at the Federal Reserve’s next meeting and, in turn, bolster demand for the ‘Greenback’.

Last week, Fed Chair, Jerome Powell, offered a hawkish outlook, stating:

‘We will proceed carefully as we learn more about the implications of the Ukraine war on the economy.

‘We have an expectation that inflation will peak and begin to come down this year. To the extent inflation comes in higher or is more persistently high … we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings.’

Moreover, Ukrainian and Russian officials are in talks this morning in hopes of finding a diplomatic solution to the current war.

Should the discussions turn sour, it is likely to further bolster the safe haven currency.

Pound (GBP) Losses Tempered by Hopes for a Resolution to War in Ukraine

The Pound (GBP) losses against the US Dollar (USD) have been capped today as Ukrainian foreign minister, Dmytro Kuleba, meets with his Russian counterpart, Sergei Lavrov, for peace talks in Turkey.

Although previous peace talks have proven unsuccessful, it’s hoped today’s high level talks could make some progress towards finding a diplomatic solution.

However, Kuleba stated yesterday that his ‘expectations of the talks are low’ with Russia unwilling to compromise on its demands for Ukraine to become a neutral-status state and to abandon plans to join Nato.

This cautious attitude appears to be limiting risk appetite this morning and providing limited support for the Pound, which is also struggling to find its own momentum amidst the absence of any notable UK economic data.

GBP/USD Exchange Rate Forecast: Russia-Ukraine War to Maintain Spotlight

Looking ahead, the Russia-Ukraine war will continue to influence the Pound US Dollar exchange rate in the near-term.

Depending on the conclusion of this morning’s meetings, a risk-off mood could drive investors towards the safe haven currency.

On the other hand, an increase in US initial jobless claims may cap USD’s appeal, with 217K citizens expected to have filed for benefits, up from the previous 215K.

Meanwhile, the Pound may gain some traction tomorrow following the release of the UK’s latest GDP release. The figures are forecast report a 0.2% rebound in economic growth in January, following a 0.2% contraction in December.

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TAGS: Pound Dollar Forecasts