The Pound (GBP) exchange rate managed to move away from its lowest level in 10-months against the US Dollar (USD) on Wednesday afternoon after data showed that US mortgage applications fell more than forecast last week.
According to the Mortgage Bankers Association (MBA) applications for US, home mortgages declined last week by 7.2% from the preceding week.
The MBA said that its market composite index was at its lowest level since December 2000.
The seasonally adjusted purchase index was down 3% from the previous week. The unadjusted purchase index decreased 14% from the previous week and was down 12% from the previous period.
Comments made by British Prime Minister David Cameron also lent some support to the Pound after he said that a breakup of the United Kingdom would break his heart.
The GBP to USD exchange rate is trending around 1.6160.
Some economists believed that the PM’s impassioned comments might be enough to swing the vote back in favour of the No to Independence campaign.
“You’ve heard a lot of what I call arguments of the head, but it’s also important we make arguments of the heart,” Cameron said in a speech in Edinburgh today. “This vote isn’t about whether Scotland is a nation. Scotland is a nation. But it’s a nation that’s chosen for the last 300 years to be part of a family.”
Meanwhile Bank of England Governor Mark Carney was testifying to parliament and whilst attempting to avoid questions on whether a Scottish/UK currency union would be viable suggested that Scotland would not have enough money in reserve for such a scheme to work.
‘Any currency arrangement has to be credible, he says. It is a judgement for the relevant authorities what best suits their economy and their broader circumstances And regarding fiscal matters, it is a judgement about the priorities of those authorities,’ said Mr Carney.
The BoE governor said that the UK Central Bank would implement contingency plans if needed if Scotland votes for independence.
GBP to USD exchange rate forecast
The gains for Sterling are forecast to be slight and short-lived as market attention turns to the publication of a new Scottish opinion poll on independence.
If the survey adds to others that show a lead for the pro-independence campaign then the Pound will likely fall, if the reverse occurs then we can expect the currency to make gains.
On Thursday, attention will shift to the latest Jobless Claims data out of the US. A positive set of reports will likely increase expectations that the Federal Reserve will raise interest rates sooner than expected.
The US government is also due to release its latest monthly budget statement. The nation is expected to see its deficit narrow from $-130 billion to $-95 billion.
UPDATE
The Pound Sterling to US Dollar exchange rate advanced by almost 0.2% on Thursday, briefly pushing above 1.62 as investors responded positively to a survey giving unionists the upper hand in the Scottish referendum battle.
Although the YouGov report published at the weekend put nationalists just out front, this poll showed that unionists currently hold a 6% lead.
The Pound accordingly advanced on almost all of its most traded currency counterparts.
Further GBP/USD movement could occur during the European session if the US initial jobless and continuing claims figures surprise. Investors will also be taking an interest in the US monthly budget statement.
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,0.6188 ,
US Dollar,,Euro,0.7736 ,
US Dollar,,Canadian Dollar,1.0975 ,
US Dollar,,Australian Dollar,1.0928 ,
Pound Sterling,,US Dollar,1.6160 ,
Euro,,US Dollar,1.2928 ,
[/table]
