GBP to USD exchange rate remains close to four-and-half-year high

The GBP to USD exchange rate was trading steadily on Friday and remained close to the four-and-a-half year high of 1.68 as UK retail sales offered support to Sterling.

Against the Euro the US Dollar was also little changed as market sentiment was weighed upon by concerns over mounting tensions in Ukraine.

The ‘Greenback’ was also unable to push higher against its rivals due to the release of mixed domestic data releases.

The first piece of data released was Markit’s preliminary survey of US services companies. The PMI showed that the sector slowed in April to a figure of 54.2. The figure was below the previous month’s level of 55.3 and was worse than economist forecasts for a figure of 55.5. Despite the fall the figure was above the 50 level which divides expansion from contraction.

“With the expectations of the government shutdown last October and the weather-related disruptions in February, the rate of economic growth signalled by the flash services and manufacturing PMI’s in April was the weakest since May of last year.

‘In the service sector there are worrying signs for future momentum. Levels of outstanding business fell at the fastest rate since last August, and firm’s optimism about the year ahead also waned,” said Markit’s Chris Williamson.

On a more positive note the Thomson Reuters/University of Michigan’s consumer sentiment report soared to its highest level in nine months. The index of consumer sentiment increased to 84.1, beating the previous months figure of 80 and beat forecasts for 83.0. The figure was the highest recorded since last July.

Movement in the markets was restrained on Friday with most currency’s experiencing little movement against their peers. The main cause was the decline in investor sentiment as the situation in Ukraine deteriorated with both the USA and Russia escalating their war of words.

Next week promises to be a busy one for the forex market as a wealth of economic data is due for release. The most important data due for the US is next Wednesdays GDP and Adp Employment change reports as they offer a firmer insight as to the strength of the world’s largest economy.