The Pound (GBP) to US Dollar (USD) exchange rate declined for a sixth consecutive session on Wednesday as weak UK manufacturing PMI data weighed on the UK currency and positive jobs data bolstered the ‘Greenback’.
A stronger than forecast employment report bolstered the US Dollar as it increased market speculation that the Federal Reserve will raise interest rates sooner than initially expected.
Payroll processing firm ADP said that non-farm private employment in the world’s largest economy increased by 213,000 last month, beating forecasts for a figure of 210,000. The strong figure adds to Augusts data, which showed an increase of 202,000.
Sterling was weakened earlier in the session after a report published by Markit showed that manufacturing production in the UK slowed to its slowest pace in 17 months last month as new order demand stalled.
Markit research group said that the U.K. manufacturing purchasing managers’ index fell to 51.6 in September from a reading of 52.2 in August, whose figure was downwardly revised from a previously estimated reading of 52.5. Economists had been expecting the index to rise to a reading of 52.5.
Ongoing weakness in the Eurozone economy was blamed for the slowdown.
‘September’s disappointing reading will add to the air of caution as to whether the economy is ready for higher interest rates,’ said Rob Dobson, senior economist at Markit.
Pound Sterling to US Dollar Exchange Rate Forecast
The Pound is forecast to soften further against the buoyed US Dollar over the rest of the week as UK economic data is likely to show signs of softening as the UK economic recovery peaks.
‘The Pound will continue to trade on the back foot against the US Dollar mainly because UK data is starting to top out and as the US Dollar is trading with a stronger tone coming into the fourth quarter. I would not be surprised to see the
Pound trading towards the $1.60 level,’ said Peter Kinsella, a senior foreign exchange strategist from Commerzbank AG.
Sentiment towards the US Dollar is not slowing down as the positive economic data releases keep coming. Disappointing data released in the Eurozone, the UK and elsewhere is creating a dovish mood towards other currencies and hawkishness to the ‘Greenback’.
On Thursday, the latest UK Construction PMI data is likely to show a slight decline in September. The US Dollar meanwhile is likely to receive support from Jobless Claims and Factory Order reports.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6167 ,
US Dollar,,Euro,0.7930 ,
US Dollar,,Canadian Dollar,1.1196 ,
US Dollar,,Australian Dollar,1.1477 ,
Pound Sterling,,US Dollar,1.6220 ,
Euro,,US Dollar,1.2610 ,
[/table]
