The Pound Sterling to US Dollar (GBP/USD) exchange rate recorded gains on Wednesday, trending in the region of 1.5181.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending within a narrow range on Tuesday morning.
As traders await British construction data, due for publication later on Tuesday morning, the Pound is generally softer versus most of its major peers. With the forthcoming general election causing political uncertainties, and with negative sentiment towards an inactive Bank of England (BoE), the Pound is unlikely to make any significant gains.
The US Dollar, meanwhile, is generally holding steady versus most of its major peers despite less-than-ideal data on Monday. This can be attributed to traders speculating that the Federal Reserve will be the first of the major central banks to tighten monetary policy.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5019.
Yesterday…
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.27% on Monday morning.
With most traders speculating that the Bank of England (BoE) rate decision, due on Thursday, will once again reveal a lack of action from policymakers, the Pound softened versus many of its major peers. Additional losses can be attributed to Labour edging opinion polls for the forthcoming general election.
Labour’s moderate approach to austerity and perceived lack of economic competence is seen as bad for British business.
Although the headline figure from manufacturing data showed output eclipsed the forecast figure in January, some underlying issues may also anchor the British asset.
The US Dollar, meanwhile, is generally holding steady versus most of its major peers as traders await US manufacturing data, due for publication later on Monday. Federal Reserve policy divergence is seeing continued support for the North American currency.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5025.
Pound Sterling (GBP) Exchange Rate Softens on Opinion Polls
As we draw closer to the UK’s general election, opinion polls indicate that the Labour party are edging the vote.
This caused the Pound to slump versus most of its major peers as traders fear that a Labour victory would be catastrophic for British business. Boots boss, Stefano Pessina, said that Labours moderate approach to austerity and plans to increase tax, spending and regulation would be a ‘catastrophe’ for the UK.
In an interview with the Sunday Telegraph, Pessina said: ‘The problem is would they [Labour] act that way or not? One thing is to threaten and to shout but it is completely different to be in charge and to manage the country day-to-day … [and if they did it would be] not helpful for business, not helpful for the country and in the end it probably won’t be helpful for them.’
A senior Labour source responded by saying ‘We are not going to stand a Tory analysis of our economic policy from someone who is worth £7.5bn and does not pay tax in this country.’
Although British manufacturing output was higher than the forecast figure, the headline figure masks some difficulties within the sector as Rob Dobson, Senior Economist, stated; ‘UK factories reported a welcome upturn in growth of output and order books at the start of the year, but producers clearly remain stuck in a low gear. The rate of expansion remains muted, however, with output rising at a quarterly pace of around 0.2% in January, barely improving on the 0.1% registered in the final quarter of last year. At this rate, the sector will provide little meaningful boost to the economy in the first quarter.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low of 1.5002.
US Dollar (USD) Exchange Rate Edges Higher on Economic Divergence
As traders await manufacturing data, the US Dollar edged higher versus many of its most traded currency rivals. Investors will be hoping for positive domestic data to pile the pressure on the Federal Reserve to tighten monetary policy. The policy divergence between the Fed and other central banks continues to feed into Dollar support.
St. Louis Federal Reserve President James Bullard stated; ‘The market has a more dovish view of what the Fed is going to do than the Fed itself.’ ‘Markets should take it at face value’ from the Fed’s rate projections, and it’s ‘reasonable’ to expect an increase in June or July.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Losses
Providing US Data avoids any shocking results, the US Dollar is likely to hold gains amid positive sentiment towards the North American asset. Therefore, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold losses for the remainder of Monday.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high today of 1.5088.
