Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend Lower after UK Manufacturing Slowed
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.4% on Wednesday afternoon.
British economic data produced mixed results today, but an unexpected contraction in annual manufacturing output in October weighed heavily on demand for the Pound. With only the services sector robust enough to encourage economic growth, plans to rebalance the British economy towards export-led growth is looking increasingly difficult to achieve. ‘While we expect the overall economic recovery to pick up the pace again in coming quarters, a sustained rebalancing towards production and exports still seems a distant prospect,’ said Ruth Miller, economist at Capital Economics.
Although manufacturing output failed to impress, Industrial Production equalled estimates on the month in October and eclipsed expectations on the year. In addition, November’s NIESR Gross Domestic Product Estimate came in at 0.6%; bettering the previous figure of 0.5%.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4996.
US Dollar to Pound Sterling (USD/GBP) Conversion Rate Predicted to Hold Gains despite Euro Strength
Despite the current strength of the Euro, which usually limits US Dollar gains, the North American asset climbed versus many of its peers during Tuesday’s European session. The appreciation is mostly the result of rising futures regarding the likelihood of a Federal Reserve cash rate increase on the 16th of this month. Polls now see an 80% likelihood that the Fed will tighten policy. Trader focus is now shifting to the rate at which the Fed will tighten policy with future moves likely to be data-centric.
‘I’m ready for a decision to lift off’ and push rates up from the near-zero setting they have rested at since December 2008, stated Atlanta Fed leader Dennis Lockhart yesterday in The Wall Street Journal. ‘I’m satisfied’ the criteria set by the Fed to determine when to raise rates ‘have been substantially met. The discussion of a raising rate environment has been in the air for well over a year now,’ he added. ‘Emerging markets are either eager for us to get on with it, or are at least sort of prepared and resigned to a rising Dollar rate environment.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.4954 today.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Quiet Trade Tomorrow on Lack of Influential Data
With a distinct lack of influential economic data pertaining to both the UK and the US there is the potential that the GBP/USD exchange rate will see quiet trade tomorrow. With that being said China’s Consumer Price Index data has the potential to stimulate market volatility.
Thursday will be far more likely to see GBP/USD movement with the Bank of England (BoE) interest rate decision due. The accompanying meeting minutes and press conference will overshadow the decision itself given that policymakers are very unlikely to alter policy outlook at this time.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.5061 today.
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