As pundits await the latest US data today the GBP/USD exchange rate is on a downtrend, unsupported by a weakening UK Construction Output.
UK Construction Output Slumps as GBP/USD Exchange Rate Trends Lower
Following Wednesday’s raft of UK employment data there has been little in the way of domestic stimulus to particularly drive Pound (GBP) movement. Sterling was pushed higher against rivals by the revelation that the ILO Unemployment Rate had unexpectedly fallen to a fresh seven-year low of 5.3%, particularly as this came on the heels of a more hawkish remark from Bank of England (BoE) Governor Mark Carney. Suggesting that the domestic economy was strong enough to weather current negative global conditions, Carney prompted fresh speculation that the BoE could move on interest rates sooner rather than later within the next year.
Friday’s domestic Construction Output figures proved less optimistic than hoped, however, with the figures falling short of estimates to show continued contraction both on the month and the year. While these reports were not afforded especially strong importance by traders they did not offer particular encouragement to the odds of the BoE raising rates in the near-future.
US Dollar Currency News: US Jobless Claims Unexpectedly Advance to Weigh on Outlook of USD
Following concerns of US Dollar (USD) overvaluation which drove the currency down towards the start of the week, investors were not impressed by unexpected increases in both the country’s Initial and Continuing Jobless Claims. This rather implied that the domestic employment market was not quite as bullish as might have been thought after last week’s strong Change in Non-Farm Payrolls report. As Fed Chair Janet Yellen failed to adopt a particularly hawkish tone in comments yesterday, avoiding the subject of an interest rate rise entirely, this naturally saw some of the strength of the ‘Greenback’ falter.
GBP/USD Exchange Rate Forecast: Downtrend Predicted on Strong US Data Today
Ahead of this afternoon’s major US Advance Retail Sales and University of Michigan Confidence Index the GBP/USD exchange rate is on a downtrend, with forecasts predicting that both figures will show improvement on the month. Should consumer demand have risen in line with estimates this will offer some fresh support for the odds of an imminent move on monetary policy from the Federal Open Market Committee (FOMC), indicating that the domestic economy remains robust. A higher confidence reading will also likely drive up demand for the US Dollar, to the marked detriment of the GBP/USD pairing.
Current GBP, USD Exchange Rates
At time of writing, the Pound Sterling to US Dollar (GBP/USD) exchange rate was on a downtrend around 1.5223, while the US Dollar to Pound Sterling (USD/GBP) pairing made gains in the region of 0.6569.
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