The British Pound to US Dollar (GBP/USD) exchange rate was trending in a tight range on Wednesday ahead of UK Markit Composite and Services Purchasing Managers Indexes (PMI) and US ISM Non-Manufacturing Composite and the Federal Reserve Beige Book release.
Earlier… The British Pound to US Dollar (GBP/USD) exchange rate remained in a tight range on Tuesday, despite an upbeat Markit UK Construction Purchasing Managers Index (PMI).
Go the UK ! Markit: Sharpest expansion of construction activity for four months #GBP #GDP
— Shaun Richards (@notayesmansecon) March 3, 2015
Markit recorded a rise from 59.1 to 60.1 in February, rather than the fall to 59.0 forecasts had suggested.
The report read: ‘UK construction companies indicated a further acceleration in output growth during February, driven by the fastest increase in new orders since October 2014.’
With many economists recently suggesting the UK was undergoing an economic slowdown, some ecostats are printing surprisingly well.
Markit senior economist Tim Moore commented: ‘The latest survey highlights renewed vitality within the UK construction sector, as output growth picked up further from the soft patch seen at the end of 2014. Stronger short-term growth momentum in February was matched by positive sentiment towards the year-ahead business outlook.’
However, although sentiment may remain positive, the upcoming general election poses a threat to British Pound to US Dollar (GBP/USD) exchange rate stability.
Moore continued: ‘However, some construction companies noted that the uncertain General Election outcome could prove a temporary bump in the road for new work, as some clients had sought to delay spending decisions.’
Meanwhile, the US Dollar is in for a relatively quiet day on Tuesday by way of domestic data, ahead of a hefty day on Wednesday. The US ISM Non-Manufacturing Composite index is due to be published during Wednesday’s trading and is expected to decline from 56.7 to 56.5.
In addition, the US Federal Reserve will release its Beige Book, which could see the US Dollar to British Pound (USD/GBP) exchange rate fluctuate.
Fed Rate Hike Speculation Keeps USD/GBP Exchange Rate Tentative
The Fed recently adopted a more dovish tone when it comes to the eagerly anticipated topic of interest rate hikes and as a result, ‘Greenback’ investor sentiment declined. Fed Chairwoman Janet Yellen has remained sturdy in recent months and suggested a period of lower interest rates would be favourable for the US economy.
Strategist Sireen Harajli commented: ‘There’s definitely going to be a lot more focus on the data going forward. Markets will try to look at the details and try to figure out what the Fed may or may not do as a result of the data.’
British Pound to US Dollar (GBP/USD) Exchange Rate Forecast
The GBP/USD currency pair could be in for massive movement on Friday with the release of the Bank of England 12 Month Inflation forecast as well as US Change in Non-Farm Payrolls and Unemployment Rate stats.
If the US Unemployment Rate drops from 5.7% to 5.6% as forecast, the US Dollar is likely to rally and leave the British Pound far behind.
The British Pound to US Dollar (GBP/USD) exchange rate is trading at 1.5390. The US Dollar to British Pound (USD/GBP) exchange rate is trending in the region of 0.6501.
