The Pound Sterling to US Dollar (GBP/USD) exchange rate strengthened by around 0.13% on Thursday morning.
After Federal Reserve minutes showed policymakers erred towards caution, speculation of a rate hike delay caused the US Dollar to soften versus the majority of its most traded currency rivals. Si9gnificantly dampened risk appetite, however, saw a fractional Dollar recovery thanks to its safe-haven qualities.
The Pound Sterling, meanwhile, is generally bullish versus its major peers thanks to widening policy divergence. As the Fed look to delay a hike, the Bank of England (BoE) seems to be preparing to begin a tightening cycle.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5449.
Yesterday…
The Pound Sterling to US Dollar (GBP/USD) exchange rate strengthened by around 0.51% on Wednesday afternoon.
Having started the year riding the crest of a rate hike wave, the US Dollar softened considerably after a succession of disappointing domestic data results. Futures traders have pared bets as to the timing of a benchmark rate increase, with Wednesday’s data widening the cracks in investor confidence.
Conversely, the Pound has seen consistent appreciation since the turn of the year thanks to improving domestic data. Very positive results from Wednesday’s British data bolstered speculation that the Bank of England (BoE) will be one of the first major central banks to hike rates.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region 1.5430.
Pound Sterling (GBP) Exchange Rate Rallies on Positive Data
Wednesday’s British data printed positively, causing the Pound to strengthen against all 16 of its most-traded currency rivals. The combination of low inflation, falling unemployment, higher wages and fewer benefits claimants is supportive of hasty economic growth.
Work and Pensions Secretary Iain Duncan Smith said: ‘With unemployment continuing to fall, wages rising, and a record number of people in work, it’s clear that the Government’s long-term economic plan to get the country back on track is working. The jobs-led recovery is changing people’s lives for the better on a daily basis. We are getting people into work, making work pay, and in so doing we are ensuring a better future for Britain.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low of 1.5337 today.
US Dollar (USD) Exchange Rate Dives on Negative Data
In contrast to its British counterpart, the US Dollar softened versus many of its major peers thanks to a series of disappointing data results. Wednesday’s data compounded speculation that the Federal Reserve will delay hiking rates for the foreseeable future. Of particular disappointment was Mortgage Applications, which declined significantly in February by -13.2%. In addition, both Building Permits and Housing Starts declined in January.
‘Mortgage rates increased to their highest level since the beginning of the year last week, and application volume dropped sharply as a result, particularly for refinances. The market index declined to its lowest level since the week ending January 2nd as purchase application activity decreased seven percent and refinance applications decreased 16 percent. Refinance volume fell particularly for larger loans, as evidenced by the decline of almost $25,000 in the average loan size for a refinance loan,’ said Mike Fratantoni, MBA’s Chief Economist.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Gains
With sentiment towards the BoE improving, and sentiment towards the Fed dampening, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold gains for the remainder of Wednesday. Thursday ought to see GBP/USD volatility with North American labour market data due for publication.
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced to a high today of 1.5446.
