Fed Keeps Interest Rates Static to Send US Dollar (USD) on Downtrend, GBP/USD Exchange Rate Profiting Today
With the Federal Open Market Committee (FOMC) having decided to leave interest rates unchanged yesterday evening the ‘Greenback’ (USD) entered a general slump across the board as hopes for the first hike since 2008 were dashed. This morning the GBP/USD conversion rate is continuing to uptrend around 1.5585.
Earlier…
Underperforming UK Retail Sales failed to hold back the Pound (GBP) this morning as trading on the ‘Greenback’ (USD) remains cautious in advance of tonight’s Federal Open Market Committee (FOMC) interest rate decision.
UK Wages Grew at Fastest Rate in Six Years to Boost GBP/USD Conversion Rate to Three-Week Best
Shaking off the dovish influence of recent domestic inflation data the GBP/USD conversion rate surged on the strength on yesterday’s UK labour market figures. Whilst unemployment in the three months to July was revealed to have unexpectedly fallen from 5.6% to 5.5%, the Average Weekly Earnings for the same period proved counter to forecast, demonstrating an increase of 2.9%. The fastest pace of wage growth in six years, this naturally sparked renewed speculation that the Bank of England (BoE) will speed up its monetary tightening schedule. BoE Governor Mark Carney helped stoke investor appetite as he asserted that further positive data could prompt the Monetary Policy Committee (MPC) to make their first hike as soon as the first quarter of 2016. Consequently the GBP/USD exchange rate struck a three-week peak of 1.5522.
Although Wednesday’s US Consumer Price Index demonstrated that domestic inflation had failed to increase as expected, remaining at 1.8% for August, this did not have a dramatically dovish impact upon the ‘Greenback’ (USD). As the weak figure lent strength to suggestions that the Federal Open Market Committee (FOMC) will not choose to increase interest rates at this afternoon’s meeting, the US Dollar was not particularly softened. Traders generally reacted positively to the possibility of a hold given the concerns that have recently been expressed over the fact that a premature hike could ultimately damage the domestic, and global, economy.
Weakened UK Retail Sales Tempered Hawkish Trading Today, Pound (GBP) Holds onto Gains against Sluggish ‘Buck’ (USD)
This morning has not been so positive for the Pound (GBP), however, as UK Retail Sales for August fell short of predictions to post a decline on the previous month’s annual figure. While this suggests that the domestic economy is still showing signs of slowing there has been some speculation that this drop may be attributable to consumers simply choosing to hold off on purchases in advance of the autumn discount season. Given the limited importance afforded to this figure relative to the unemployment data, though, the GBP/USD pairing has remained trending in positive territory today.
GBP/USD Exchange Rate Forecast: Conversion Rate to Experience Great Movement with Tonight’s Fed Interest Decision
As markets wait on the conclusion of the evening’s FOMC meeting the ‘Greenback’ is unlikely to experience a significant degree of movement as investors position themselves for the possibility of a hike or a hold. Even if policymakers do choose to leave off on an interest rate rise this session, as the majority of pundits expect, the tone of comments and any suggestions as to the potential date of a start to tightening are likely to drive the GBP/USD pairing.
Current GBP, USD Exchange Rates
At time of writing the Pound Sterling to US Dollar (GBP/USD) exchange rate is on an uptrend at 1.5530, with the US Dollar to Pound Sterling (USD/GBP) pairing is slumped in the region of 0.6438.
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