US Dollar Dips Against Pound, Euro As US Consumer Confidence Slides

The Pound to Dollar exchange rate (GBP/USD) found support above 1.2600 in early Europe on Tuesday and rallied strongly after the US open.

The dollar dipped towards 2-month lows following another weaker-than-expected data release, with GBP/USD strengthening to 1.2675 and close to 2-month highs.

According to Scotiabank, “the sideways movement in price may be a consolidation ahead of another push higher towards 1.28. Support is 1.2600/10.”

The Pound to Euro (GBP/EUR) exchange rate edged lower to near 1.2050 as the Euro continued to gain net support from Germany’s weekend election.

UK retail energy prices will be increased 6.4% for April and other increases in regulated prices will put further upward pressure on inflation and further complicate the Bank of England policy stance.

US consumer confidence dipped to 98.3 for February from a revised 105.3 the previous month and below consensus forecasts of 102.7.

Conference Board Senior Economist Stephanie Guichard commented, “This is the third consecutive month-on-month decline, bringing the Index to the bottom of the range that has prevailed since 2022.”

MUFG noted the importance of the US economy; “Our view of a weaker US dollar in the second half of the year reflects our assumption of slower economic growth allowing the Fed to resume monetary easing.”

It added, “The US consumer is very unlikely to continue driving the US economy with post-covid stimulus running dry for more consumers resulting in a greater exposure to tighter monetary policy.”