The US Dollar (USD) is forecast to end the week higher against its major peers after data releases earlier in the week increased trader speculation that the Federal Reserve will raise interest rates sooner than initially expected.
The Pound (GBP) to US Dollar exchange rate slid to a two month low whilst the Euro (EUR) to US Dollar exchange rate weakened to a fresh eight month low.
With only Markit’s latest Manufacturing PMI report due for release the Pound is likely to weaken further as economists expect the data to show a slowdown in manufacturing activity in July.
Pound Sterling Exchange Rate Forecast
If so then the report will add to signs that the Pounds strong rally could be slowing down. Economists are forecasting that the index will ease from June’s reading of 57.5 to 57.2.
A worse figure than that will likely send the Pound falling further against the US Dollar, Euro and other peers.
The main data releases out of the Eurozone include French, German and Eurozone manufacturing PMI data.
A positive figure out of Germany could alleviate some of the concerns over the French economy.
A disappointing number from the regions second largest economy however will likely heighten concerns that the Eurozone’s top two economies are continuing to diverge.
The single currency fell on Thursday after data showed that the annual rate of inflation in the Eurozone fell to its lowest level since the height of the Eurocrisis.
The Euro found some support however after a separate report showed that unemployment across the 18-member region dropped slightly in July.
Investors will mostly be focused on the afternoon’s data releases out of the USA.
If the latest unemployment rate and nonfarm payrolls reports come in strongly then we can expect the ‘Greenback’ to make further gains. Also due for publication is Markit’s manufacturing PMI and ISM’s manufacturing PMI data.
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