The Pound to US Dollar (GBP/USD) exchange rate fell to a fresh 14-month low on Thursday after the UK currency took a beating on Wednesday after the Bank of England slashed its growth forecasts and warned that inflation will fall below 1% over the coming months.
Investors embarked on a broad selloff of the Pound as the BoE warned that inflation is likely to remain below its target of just under 2% and could fall below 1% over the next six months as price prices persist and the weakness of the Eurozone and other leading economies weighs upon prices. The bank also added that it does not expect inflation to reach its target level for at least three years.
The BoE’s dovish comments regarding interest rates also weighed, and the impact of that was exacerbated by comments made by deputy governor Ben Broadbent. He reaffirmed that interest rates would not rise until late next year.
Broadbent also repeated the bank’s guidance that any rate increases will be gentler than those made in the past and would stay at a lower level than those seen before the financial crisis.
Also weighing on the Pound was the release of data, which showed that UK house price growth has slowed sharply in the three months to October to the weakest level since May 2013. The fall adds to signs that the BoE’s attempts to cool the housing market are working as banks approve fewer mortgages than they did before.
Pound Sterling to US Dollar Exchange Rate Forecast
The GBP/USD is likely to remain under pressure as the session progresses as traders look ahead to the release of the latest US Jobless Claims data. Economists are forecasting for more improvement to the figures.
The US Dollar is forecast to make further gains against the Pound as economists await the release of the latest US Jobless Claims data. Another set of strong reports will bolster the ‘Greenback’.
Sterling Continues to Ease Despite US Jobless Claims Data
Sterling continued to weaken against the US Dollar despite Jobless Claims data showing that more US citizens than forecast made unemployment benefit claims last week.
According to the Washington based Labour Department, the number of people filing for initial jobless benefits in the week ending November 8 increased by 12,000 to a seasonally adjusted 290,000 from the previous week’s total of 278,000.
Analysts had expected jobless claims to rise by 4,000.
Economists will now be looking ahead to Friday’s US Retail Sales data.
On a monthly basis sales are expected to rise.
If the data comes in better than forecast we could see the US Dollar make further gains against the Pound.
The Pound to US Dollar exchange rate is forecast to fall further further next week as UK data releases are unlikely to offer support to the currency.
