Pound Sterling to US Dollar (GBP/USD) Exchange Rate – ‘Greenback’ forecast to rise on Yellen comments

The US Dollar is forecast to rise later in Tuesday’s session as Janet Yellen, the New Federal Reserve Chairman is expected to pledge that the Central Bank will continue with the tapering of its monetary easing programme.

The ‘Greenback’ regained lost ground against the Euro and other peers after Yellen said that more work needs to be done to strengthen the USA’s jobs market but vowed to maintain the tapering to the Fed’s quantitative easing programme.

“Let me emphasize that I expect a great deal of continuity in the Federal Open Market Committee’s approach to monetary policy,” Yellen said.

“Some of her comments are slightly dovish, but you can clearly see that Yellen considers tapering the right policy. With the weak data we got in recent weeks, some part of the market might’ve thought the Fed would be willing to slow the pace of tapering. But she’s made it clear that’s not the case,” said a foreign exchange strategist in a phone interview with Bloomberg.

Sterling climbed to a weekly high against the US Dollar earlier in the session after a report released by the British Retail Consortium showed that retail sales growth in the country leapt by 3.9% on a year by year basis. The figure added to the 0.4% rise recorded in December and smashed economist forecasts for a rise of 0.8%.

The report increased optimism over the state of the UK economic recovery and increased speculation that Bank of England Governor Mark Carney will announce adjustments to the BoE’s forward guidance policy at Wednesday’s quarterly inflation report.

Thursday sees the release of the latest US retail sales data and initial jobless claims report.