Ahead of today’s important UK Services PMI the GBP/USD exchange rate is trending narrowly in the region of 1.5422.
Earlier…
Although the Pound (GBP) was shored up by this morning’s UK Construction PMI the GBP/USD exchange rate has since entered a downturn, prompted by a surprisingly strong improvement in the ISM New York Index.
Strong UK Manufacturing PMI Bolstered Pound (GBP), ‘Greenback’ (USD) Retreated on Declined 2015 Interest Rate Rise Odds
Yesterday saw the Pound (GBP) achieve a strong bullish run against rivals after the October UK Manufacturing PMI showed unexpectedly large improvement on the month. Where traders had been anticipating a slight dip in sector output the figure instead rose sharply from 51.8 to 55.5, suggesting that domestic manufacturing experienced a particularly strong month of expansion. Although economists did issue cautions that this number is likely not indicative of a substantial turnaround and that the sector is not likely to sustain this level of growth through the rest of the quarter, this failed to have a particularly diminishing impact upon Sterling.
While the US ISM Manufacturing gauge was not quite as dovish as forecast, sliding to 50.1 rather than 50, this was not sufficiently positive to shore up the ‘Greenback’ (USD) on Monday. Showing that the sector only grew marginally on the month this offered little clarity to investors betting on the odds of a December interest rate rise from the Fed.
US Dollar Currency News: ISM New York Index Surpasses Estimates to Trigger USD Rally
This morning’s UK Construction PMI produced no surprises for pundits, showing that industry expansion slowed slightly in October but remained well clear of contraction territory. As such this kept Sterling on a relatively strong footing, appearing to bode well for the nation’s upcoming Services and Composite PMI readings.
Fresh US data continued to throw doubts on the probability of the Federal Open Market Committee (FOMC) opting to make a move on monetary policy before the end of the year. September Factory Orders failed to improve as far as hoped, clocking in at -1.0%, however this was offset by the revelation that the ISM New York Index saw a substantial boom in the last month. Taking investors by surprise the figure leapt from 44.5 to 65.8, indicating that areas of the domestic economy remain robust.
GBP/USD Exchange Rate Forecast: Pound Rise Predicted on Upcoming UK Services PMI
The Pound could strengthen further on the back of Wednesday’s Services PMI, should the index demonstrate the expected improvement. As the service sector accounts for the largest portion of the UK’s GDP a strong showing here could inspire the currency to extend its recent gains, although trade may take on a more dovish tone ahead of Thursday’s Bank of England (BoE) Rate Decision and meeting minutes.
Both the US ADP Employment Change and ISM Non-Manufacturing Composite readings are likely to provoke volatility for the US Dollar tomorrow, particularly as expectations are for further declines. Should this data continue to pile doubt onto the likelihood of the Fed imminently moving on interest rates the GBP/USD exchange rate could well return to an uptrend.
Current GBP, USD Exchange Rates
At time of writing, the Pound Sterling to US Dollar (GBP/USD) exchange rate was shedding value in the region of 1.5391, while the US Dollar to Pound Sterling (USD/GBP) pairing climbed in the range of 0.6496.
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