After ending last week at a six-month low the Pound Sterling to US Dollar (GBP/USD) exchange rate has seen a small increase amid a quiet day for UK data.
GBP/USD Exchange Rate Rises Modestly as Investor Demand for the Dollar Falls
Following a few days of significant losses against many of the major currencies after the washout of the Bank of England’s (BoE) ‘Super Thursday’, Sterling has seen a moderate rise of 0.13% against the US Dollar. While strong US Non-Farm Payroll data saw USD/GBP continue the climb triggered by the UK’s stagnating interest rates, Sterling has begun to claw back ground.
Strong payroll data increases the likelihood of a December rate hike by the Federal Reserve; a move which had already been described as a ‘live possibility’ by Chairwoman Janet Yellen even before the Non-Farm data was released. While this has strengthened the US Dollar, it has renewed faith in the Pound too, as traders hope action by the Fed will give Bank of England (BoE) policymakers the confidence to follow suit and commit to the first UK interest rate rise in 80 months.
Trending at a high of 1.5083, ‘Cable’ still has a significant way to go before recovering to last week’s high of 1.5472.
USD/GBP Exchange Rate Falls Today As Investors Cash in on Strong US Dollar Performance
With the Non-Farm Payrolls driving the US Dollar to a high against the Euro (USD/EUR), many investors have taken the opportunity to realise their gains, resulting in a dip in demand for the ‘Buck’. Others have exploited the low position of the Euro, buying the single currency while it remains low. The drop in demand for the US Dollar, combined with a rising interest in the Euro has seen the ‘Buck’ fall against all the major currencies apart from the Indian Rupee (USD/INR), the Japanese Yen (USD/JPY) and the South African Rand (USD/ZAR).
The US Dollar is currently trading down against Pound Sterling between 0.6623 and 0.6644.
GBP/USD Exchange Rate News: US Price Index and Wholesale Inventories In Focus
With little relevant UK data being released until Wednesday, when important employment figures are due to be printed, it is likely that US data will be the main influencer on ‘Cable’ over the next couple of days. US Import Price Index data and Wholesale Inventories is predicted to see modest growth, but is unlikely to have a large impact upon the strength of the US Dollar.
Otherwise, it will the quarterly UK employment data and US Mortgage Applications data on Wednesday that sees ‘Cable’ trending significantly up or down.
GBP/USD exchange rate is currently trading modestly up from 1.5047 to 1.5101.
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