The Pound Sterling to US Dollar (GBP/USD) exchange rate jumped in the second half of Tuesday’s European session after the US Chicago Federal Reserve Purchasing Managers Index (PMI) printed out of line with forecasts.
Industry experts had predicted a rise from 45.8 to 51.8 in March, a clear leap into growth territory. Any ecostat below the 50.0 benchmark denotes contraction whereas above shows expansion. However, the US manufacturing sector hadn’t performed as well as forecasts suggested in March, instead rising to only 46.3.
Economist Philip Uglow commented: ‘There was some expectation that the barometer would bounce back in March following the sharp fall in February. Instead we are faced with a second consecutive sub-50 reading.’
‘While purchasers expect to see demand increase over the second quarter, for now the data point to a significant loss of momentum in the US economy during the first quarter.’
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Struggles with Fed Index
The negative Fed ecostat outweighed the extremely upbeat US Consumer Confidence index which jumped from a positively revised 98.8 (formerly 96.4), to a hugely favourable 101.3.
Economic expert Lynn Franco commented: ‘This month’s increase was driven by an improved short-term outlook for both employment and income prospects; consumers were less upbeat about business conditions.’
The surge failed to boost the ‘Buck’ as it would normally amid a backdrop of a slowdown in the manufacturing sector. As a result, the US Dollar to Pound Sterling (USD/GBP) exchange rate began trending lower.
Meanwhile, the Pound rallied against a host of other major currency peers when the final fourth quarter Gross Domestic Product (GDP) figure hit 3.0% rather than the 2.7% forecast.
However, the Pound Sterling to US Dollar (GBP/USD) exchange rate may become unstable in coming months as we draw closer to the UK general election.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The Pound Sterling to US Dollar (GBP/USD) exchange rate could be in for fluctuations on Wednesday with the release of Markit’s UK Manufacturing PMI. US ISM Manufacturing will also be out in Wednesday’s North American trading session which could have a massive impact on the USD/GBP currency pair.
Friday will be a major day for the US Dollar to Pound Sterling (USD/GBP) exchange rate with the US Change in Non-Farm Payrolls and US Unemployment Rate ecostats due for release. Any favourable labour market data is likely to spur investor sentiment in the ‘Greenback’ as speculation for a Federal Reserve rate hike grows.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is trending in the region of 0.6733; the Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4858.
