Pound (GBP) Businesses on More Positive Predictions
The National Institute of Economic and Social Research (NIESR) released a fresh study on Wednesday morning that raised expectations that the UK economy would escape going into recession this year, which led to a rise in the value of the pound (GBP).
This estimate is more optimistic than some others, such as the most recent report from the International Monetary Fund (IMF), which forecasted that the UK’s GDP will fall by 0.6% this year.
However, additional issues mentioned in the NIESR research may have hindered Sterling’s advances.
Sterling appeared to reach a ceiling following the climb of the morning.
US Dollar (USD) Depreciates as Market Attitude Rises
Following a speech by Federal Reserve Chair Jerome Powell, the safe-haven US Dollar (USD) found itself on the back foot on Wednesday amid an uptick in market sentiment and persistent headwinds.
Powell gave his first address on Tuesday night since a scorching non-farm payrolls data the week before. Following the news, markets predicted more forceful action from the Fed, which caused the USD to surge.
However, USD speculators anticipating Powell to take a more hawkish posture were let down, and rate increase bets somewhat decreased.
This increased market risk-taking and pushed down the US Dollar going into Wednesday’s session. The markets frequently celebrate receding rate increase bets since higher US interest rates might harm the global economy.
However, ongoing global unrest restrained the optimistic market sentiment, which reduced the US Dollar’s losses.
Analysts in Europe anticipate a new Russian ground attack in the coming weeks as the conflict approaches its one anniversary.
The US shot down a suspected Chinese surveillance balloon that was flying in American territory, which has raised tensions between the US and China on the larger international scene.
GBP/USD Exchange Rate Prediction: Will Trade Be Dominated by Risk Appetite?
A lack of significant economic data may cause the Pound US Dollar pair to move according to market risk appetite on Thursday. The riskier British pound might gain ground on the safer US dollar if market sentiment is positive.
The number of new claims for unemployment benefits is anticipated to be low, which would support recent data showing that the US labor market is still tight. Such a result may lead to more Federal Reserve interest rate hike predictions, supporting the US dollar.
Investors in GBP might concentrate on UK domestic news in the interim. The UK still confronts significant economic issues, including high inflation, increasing interest rates, industrial action, poor productivity, and a cost-of-living crisis, despite the NIESR forecast’s claim that the country may avoid a recession.
In light of this, GBP movement may be restricted on Thursday as traders wait for Friday’s release of the crucial UK Q4 GDP growth figure.