While none of this week’s UK sector data quite met expectations, with the services, construction and manufacturing sectors all showing strong expansion, the UK’s growth prospects are looking pretty solid. That being said, it seems investors no longer feel that the pace of recovery is assured enough to justify the Bank of England increasing interest rates.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6115 as of 10:50 GMT.
Bets that the BoE will increase rates are falling, with the result that the Pound softened against a bullish Euro and weakened from the nine-month high recorded against the US Dollar earlier in the week.
In response to Sterling’s slump one London-based currency strategist observed; ‘Some of the momentum in the early rate hike argument has been lost. There’s realism coming through because the Pound has strengthened so much and there are obvious headwinds facing the economy. People are taking off some of their long positions, in case we see a negative shock.’
The Pound was little affected by the news that Lloyd’s gauge of employment confidence advanced from -22 to -13 in September.
1 US Dollar is currently worth 0.6205 pence
GBP/USD declines were limited as the US Dollar broadly softened as a result of the Federal shutdown preventing the release of highly influential economic data for the US.
The non-farm payrolls data, which should have been published at 13:30 today, is one of the most important reports when it comes to setting US fiscal policy.
It was expected that September’s figure would show that the US economy added 180,000 jobs last month – a fact which would have supported the case for the Federal Reserve tapering easing.
With the shutdown continuing, the odds of stimulus being trimmed before the end of the year are falling, and the US Dollar is falling with them.
Therefore, if next week’s UK industrial/manufacturing production and trade balance figures show improvement and the political issues in the US continue to eat into the growth prospects for the world’s largest economy, the GBP/USD pairing could hit a fresh nine-month high.
As the Euro garnered extra support from news that the Trokia believes Portugal is showing signs of economic recovery the GBP/EUR pairing remained lower.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6115 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1841 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7078 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9401 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6205 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8446 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5856 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5148 >
(As of 10:50 GMT)
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