The Pound was continuing to experience weakness against the majority of its major peers on Wednesday and slipped to its lowest level in a week against the US Dollar as yesterdays comments by Bank of England Governor Mark Carney continues to weigh.
Sterling’s decline came after the BoE governor said that wage growth in the UK has been lower than expected and was more dovish over a possible interest rate hike than investors had been expecting.
Addressing the parliament’s Treasury Committee Carney said that the exact timing of a rate rise all depends on data releases and reiterated that when a rate rise does occur it would be gradual and limited in scope.
Earlier in June, official data showed that the U.K. unemployment rate fell to a more than five year low of 6.6% in the three months to April. However, wage growth slowed in the same period, falling to an average of 0.9% from 1.3% during the previous three months.
Yesterday’s comments were also criticised by parliamentary lawmakers as they contrasted with Carney’s Mansion house speech which suggested that a rate rise could rise before the end of this year.
The GBP to USD exchange rate is trading around 1.6971.
As a result of the Treasury select committee testimony the Pound fell below the key levels of 1.25 against the Euro and 1.70 against the US Dollar.
The US Dollar meanwhile was continuing to find support from stronger than forecast data releases which suggest that the world’s largest economy has finally begun to shrug off weakness witnessed earlier in the year.
The outlook for the US economy was supported after Tuesday’s data showed that consumer confidence climbed to its highest level since January 2008 and new home sales soared to a six year high.
The Pound to US Dollar Exchange Rate could soften further if today’s US data comes in positively. The GDP report is likely to show just how badly the US economy was affected in the first quarter of the year.
Updated 09:15 GMT 26 June, 2014
Pound (GBP) Trims Decline after Mixed US Data
The Pound (GBP) sank to a one-week low against the US Dollar (USD) yesterday. However, the British asset recovered ground against its North American rival as the local session continued and the US published an extremely mixed lot of economic reports.
The news that the US economy actually contracted by 2.9% in the first quarter of the year, rather than the 1.0% expected, caused the US Dollar to plummet against its rivals.
The shockingly bad growth report initially saw the Pound to US Dollar (GBP/USD) exchange rate push above technical resistance of $1.70.
However, as trading continued a separate report revealed that the US Markit Services PMI surged in June. The measure of the nation’s services sector pushed from 58.1 to 61.2 this month, smashing expectations for a reading of 58.0 and helping the ‘Greenback’ recover ground.
As the day progresses the Pound (GBP) to US Dollar (USD) exchange rate could fluctuate in reaction to the UK’s Financial Stability report and the US Personal Spending figures.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6971 ,
Pound Sterling,,Euro,1.2477 ,
Pound Sterling,,Australian Dollar,1.8129 ,
Pound Sterling,,New Zealand Dollar,1.9543 ,
US Dollar,,Pound Sterling,0.5893 ,
Euro,, Pound Sterling ,0.8016 ,
Australian Dollar,, Pound Sterling ,0.5516 ,
New Zealand Dollar,,Pound Sterling,0.5119 ,
[/table]
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