The Pound Sterling to US Dollar (GBP/USD) exchange rate gained by a fifth of a cent on Tuesday as investors attempted to prevent the pairing sliding to a 15-month low.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Ticks Slightly Higher
Although the US JOLTS job openings report printed positively, adding to the improving picture of the US labour market, the Pound Sterling to US Dollar (GBP/USD) exchange rate edged up by around 0.25% – aided by the news that that UK economy is estimated to have expanded by 0.7% in the three months to November.
Today movement in the GBP/USD exchange rate could occur in reaction to the UK’s trade balance data and the US monthly budget statement. The US MBA Mortgage Applications report will also be of interest.
Earlier…
The Pound Sterling to US Dollar (GBP/USD) and Euro to US Dollar (EUR/USD) exchange rates were able to advance during the North American session as US data fell short and demand for the safe-haven Japanese Yen increased.
GBP/USD Exchange Rate Fluctuates after Disappointing UK Data
While the Pound Sterling to US Dollar (GBP/USD) exchange rate had advanced to a high of 1.5695 in response to a widespread softening of the ‘Greenback’, the British currency lost ground during the European session as the UK’s Industrial/Manufacturing Production reports fell short of forecasts.
Industrial production fell by -0.1% on the month in October, rather than climbing by 0.2% as expected, while manufacturing production fell by -0.7% month-on-month. Again, a 0.2% gain had been anticipated.
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell to a low of 1.5624 after the data was published.
Earlier…
Both the Pound Sterling to US Dollar (GBP/USD) and Euro to US Dollar (EUR/USD) exchange rates fell on Friday as the ‘Greenback’ was boosted across the board by a surprisingly strong US jobs report.
GBP/USD Exchange Rate Recovers Losses on BoE Report
Last week’s unexpectedly bullish US Non-Farms payrolls print saw the Pound Sterling to US Dollar (GBP/USD) exchange rate post a notable decline before the weekend.
The fact that the US added over 300,000 positions greatly increased the odds of the Federal Reserve bringing forward its timeline for raising interest rates, with many industry experts now betting that the first hike in borrowing costs could occur in the first half of next year.
The US Dollar enjoyed a widespread rally as a result of these expectations.
However, the British asset was able to advance over the course of Monday’s session and recouped almost 0.3% against the US Dollar.
The Pound was bolstered by a report published by the Bank of England (BoE) which indicated that UK households could cope with a slow and steady increase in borrowing costs.
Further Sterling gains were enabled by the UK Lloyds Employment Confidence Index, which increased from 0 to 1.
Euro to US Dollar (EUR/USD) Exchange Rate Trends at Two-Year Low
Meanwhile, the Euro to US Dollar (EUR/USD) exchange rate extended and consolidated last week’s declines on Monday, sliding to trade in the region of a two-year low.
The US Dollar was supported as a disappointing Chinese trade report created a risk-off environment, lessening demand for assets like the Euro.
The Euro also came under pressure as German industrial production increased by less-than-expected.
The movement in the Euro to US Dollar (EUR/USD) exchange rate prompted this response from forex strategist John Hardy; ‘We’re seeing good fundamental support for the Dollar move. It’s not just about the currency moving higher, we’re also seeing the market drastically marching forward the first anticipated Federal Reserve rate hike. Any currency where the economy is leveraged to oil is still weak. US rates heading higher is a very strong negative for emerging markets.’
Although the Eurozone’s Sentix Investor Confidence report showed improvement, the data lent the Euro little support.
The reading of investor sentiment was a four month high. As stated by Investing; ‘Investor confidence in the euro zone for December improved to the highest level in four months, easing concerns over the outlook for the region’s economy, data showed on Monday. In a report, market research group, Sentix said its index of investor confidence improved to -2.5 this month, from a reading of -11.9 in November. Analysts had expected the index to improve to -9.7 in December. On the index, a level above 0.0 indicates optimism, below indicates pessimism.’
GBP/USD, EUR/USD Exchange Rate Forecast
Today’s US Labour Market Conditions Index could inspire some movement in both the Pound Sterling to US Dollar (GBP/USD) and Euro to US Dollar (EUR/USD) exchange rates.
However, investors will also be looking ahead to tomorrow’s more influential reports – including German trade figures, the UK’s Industrial/Manufacturing Production data, the NIESR GDP estimate for November and the US Wholesale Inventories stats.
Positive German trade data could help the Euro to US Dollar (EUR/USD) exchange rate recover ground.
Similarly, an improvement in UK Manufacturing/Industrial Production could boost the Pound Sterling to US Dollar (GBP/USD) exchange rate.
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,0.6404,
US Dollar,,Canadian Dollar,1.1439,
US Dollar,,Euro,0.8154,
US Dollar,,Australian Dollar,1.2063,
US Dollar,,New Zealand Dollar,1.3075,
Canadian Dollar,,US Dollar ,0.8747,
Pound Sterling,,US Dollar,1.5627,
Euro,,US Dollar,1.2290,
Australian Dollar,,US Dollar,0.8303,
New Zealand Dollar,,US Dollar,0.7656,
[/table]
