Pound US Dollar Exchange Rate News: GBP/USD Drops Ahead of BoE Governor Speech

Modified: Monday, 28 March 2022 11:35 BST - Written by John Cameron

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Drops Ahead of BoE Governor Speech

GBP/USD Stumbles Ahead of BoE Speech

The Pound US Dollar (GBP/USD) exchange rate is slipping, reaching new multi-day lows, as investors brace for a speech from the Bank of England’s (BoE) Governor, Andrew Bailey, later this afternoon.

At the time of writing, the GBP/USD exchange rate is trading at approximately $1.3147, roughly down 0.3% from today’s opening levels.

Pound (GBP) Slips as Investors Await BoE Speech

The Pound (GBP) is falling against the US Dollar (USD) this morning as investors look towards today’s speech from BoE’s governor, Andrew Bailey.

Bailey is scheduled to deliver a speech at midday. Due to dovish forward guidance from the BoE following its March policy meeting, many investors appear disinclined to place aggressive bets; this is weighing on the Pound.

Should Bailey’s speech have a broadly hawkish tone, it may provide Sterling with some support.

Meanwhile, Russia’s invasion of Ukraine continues to drag on risk-sensitive Pound, particularly as Ukrainian interior ministry adviser, Vadym Denysenko, is sceptical ‘there will be any breakthrough on the main issues.’

Although Ukrainian President, Volodymyr Zelenskiey, has stated he’s ‘prepared to discuss neutral status’ in efforts to bring the war to an end, peace talks remain at an impasse which is souring market sentiment.

The lack of meaningful progress comes as Russia continues to harden its rhetoric warning against the West’s involvement in the conflict.

Russia’s representation to the Organisation for Security and Co-operation in Europe (OSCE) warned the West’s support of Ukraine ‘will pose a huge threat to civil aviation’.

Meanwhile, GBP investors continue to express concern over how the war will stoke inflationary pressures in the UK.

US Dollar (USD) Bolstered amid Hawkish Fed Rate Hike Bets

The US Dollar (USD) is trading higher against the Pound (GBP) today as investors bet on multiple rate hikes from the Federal Reserve through 2022.

The Fed is expected to deliver its second consecutive rate hike at the next meeting in a bid to ease high inflation.

The May meeting is expected to see the Fed deliver a 50 bps rate hike following a sharp incline in commodity prices. This is pressuring consumer spending and is, in turn, weighing on the US economic recovery.

Moreover, heighted geopolitical uncertainty continues to infuse volatility into the markets, bolstering the appeal of the safe haven US Dollar.

GBP/USD Exchange Rate Forecast: Ukraine Crisis to Continue to Stoke Volatility?

The Ukraine crisis is likely to remain a key catalyst of movement for the Pound US Dollar exchange rate.

If peace talks continue to make slow progress, it may support the US Dollar and weigh on GBP/USD.

The Pound may be impacted by BoE’s Bailey’s speech this afternoon: should he deliver a hawkish tone, it may boost GBP.

An absence of UK economic data for the first part of this week’s session will leave Sterling exposed to market movements and external factors.

Meanwhile, the ‘Greenback’ may be influenced by US President Joe Biden’s 2023 budget speech. Biden is expected to announce methods to trim the deficit as well as present a new tax on the wealthiest US citizens.

On the data front, USD may benefit from JOLTS job openings for February, with 11.1 million openings expected to highlight the tightening of the US labour market.

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TAGS: Pound Dollar Forecasts