The Pound Sterling to US Dollar (GBP/USD) exchange rate strengthened on Wednesday as demand for the ‘Greenback’ eased ahead of the publication of Federal Reserve’s latest policy meeting minutes.
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate touched a session high of 1.4942
Market participants will be watching the Federal Reserve’s upcoming meeting minutes for clues as to what the central bank’s next policy moves will be after last Friday’s poor jobs data fuelled uncertainty over the timing of an interest rate hike.
The Washington based Labour Department reported at the end of last week that the U.S. economy added just 126,000 new jobs in March, a number that was less than half of February’s gain and was the smallest increase recorded since December 2013.
Expectations are growing that the Fed may now not hike interest rates until the end of the year instead of the summer. If the minutes show any sign that policy makers are hesitating, the US Dollar will likely weaken sustainably against its major peers.
Also of interest for the US Dollar will be the latest MBA Mortgage Applications data for last week. Economists are expecting applications to have risen strongly from 4.6% to 9.97%. Despite that, the ‘Greenback’ is unlikely to be broadly impacted by the data, as market attention will be fixed on the Fed minutes release.
Oil Sends ‘Loonie’ Lower
The Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate meanwhile advanced after oil prices fell back towards $58 a barrel.
The price of the commodity weakened after industry data showed that there had been a larger-than-forecast increase in US stockpiles and as Saudi Arabia announced that it had achieved record output in March.
The global supply glut shows no sign of ending and as a result, other oil producers like Canada are paying the price.
More price drops are likely over the coming months according to a number of analysts. Iran is expected to see its sanctions eased which would allow the nation to begin selling its oil on the global market.
‘The Organisation of the Petroleum Exporting Countries (OPEC) will not reduce oil production. In fact, its output may even increase with the return of Iran. Ahead of this expansion of supply, the downward pressure on the oil price will increase sharply due to speculation,’ said Hans van Cleef, senior energy economist at ABN Amro.
The Canadian Dollar could regain ground later if the US Fed minutes send the ‘Greenback’ falling. Aside from that, the next major piece of domestic Canadian data will be unemployment data released on Friday.
