Sterling Forecast to Soften against US Dollar (GBP/USD)
If we go by economic data and the median market forecasts, then the Pound should depreciate against the US Dollar over the course of next week.
On Monday there will be several more US than UK economic data publications to influence an uptrend. The two domestic data publications (monthly Pending Home Sales and Dallas Fed Manufacturing Activity) are both expected to appreciate.
The British CBI Reported Sales data on Monday will probably not have enough weighting to overshadow results from US data.
A complete absence of British data on Tuesday is likely to cause the Pound to decline further with nothing to buck the trend.
In terms of US data, the most significant publications will be Durable Goods Orders and Consumer Confidence. Durable Goods Orders have been forecast to rise significantly from -18.2% to 0.3%. Consumer Confidence is forecast to tick a little higher from 86 to 87.
Wednesday will be a particularly volatile day for the GBP/USD exchange rate with several domestic data publications pertaining to both the US and the UK. For those invested in the Pound, the Net Consumer Credit, Net Lending Securities on Dwellings, Mortgage Approvals and Money Supply will be of interest.
US Dollar Movement to be Driven by FOMC
Of particular note is the Federal Reserve interest rate decision. It is highly likely that the US Dollar will either hold or soften in the build up to this decision, although it is widely accepted that there is little chance of a change to the benchmark rate. However, there is a high possibility that the Fed will opt to tighten monetary policy which will initiate an impressive surge for the US Dollar.
Thursday’s British economic data will be of little influence on Sterling movement. As a consequence, the Pound is likely to depreciate against the US Dollar unless the Federal Reserve rate decision was particularly dovish.
The US Gross Domestic Product data will of high importance to those invested in the US Dollar. It is forecast to fall from 4.6% to 2.9% which could depress the potential bullish run. The labour market data will also be of interest to those trading with the ‘Greenback’ (USD).
Friday will be yet another day with a complete lack of British data. However, the Consumer Confidence Survey does have the potential to provoke Sterling movement, although the forecast figure is set to match the previous score.
There will be several important domestic data publications to influence US Dollar movement on Friday. Personal Income, Personal Spending, Core Personal Consumption Expenditure, Chicago Purchasing Manager and the University of Michigan Consumer Confidence will all play a part in ‘Greenback’ volatility.
