Positive US Data Sees GBP/USD Pairing Shed Gains as the ‘Greenback’ Strengthens
After the US posted some good figures on Tuesday afternoon and the sudden surge of optimistic trading on the Pound (GBP) waned, the GBP/USD conversion rate is trending narrowly around 1.5394 this morning.
Earlier…
An optimistic headwind is strongly benefitting the Pound (GBP) today as the GBP/USD conversion rate climbs.
Poor UK PMIs Weighed Heavily on GBP/USD Pairing as Friday’s US Employment Data Proved Mixed
The GBP/USD exchange rate was kept on a dovish run last week on the back of underperformances on the UK’s Manufacturing, Construction and Services PMIs. As investors were discouraged over the state of the domestic economy the Pound (GBP) progressively softened throughout the week, struggling to maintain any of the limited gains it managed against the stronger ‘Greenback’ (USD). This latest raft of disappointments bode ill for the next UK GDP figure, suggesting that the global economic slowdown and events in China have been taking a greater toll than initially estimated upon domestic production.
Traders hoping for clarity on Friday’s US data, with any indications as to the direction of the upcoming Federal Open Market Committee (FOMC) Rate Decision, were ultimately frustrated by the mixed nature of the figures. The Change in Non-Farm Payrolls for August showed that the creation of jobs in the month was lower than had been anticipated, while the domestic Unemployment Rate dropped ahead of forecasts to hits its lowest level since 2008 and reaching the Fed’s target range. With bets uncertain and no greater indication as to the probability of an imminent hike the GBP/USD pairing initially rose back to 1.5198, however, it was not long before it resumed a downtrend.
Pound (GBP) Turns Bullish Today on Optimistic Round of Trading Sentiment, ‘Buck’ Waits for Rally
In spite of the UK BRC Like-for-Like Sales figure declining significantly further than expected overnight, contracting by -1% instead of maintaining a limited degree of growth at 0.9%, Sterling has been seeing a distinct upturn against rivals today. With the bearish influence of the PMI shortfalls diminishing, the GBP/USD exchange rate has thus been able to climb further away from the four-month low at which it had clocked in ahead of the weekend. Although there has been no other domestic data to support the Pound it seems likely that this uptrend is due to pundits positioning themselves in advance of the upcoming Bank of England (BoE) data releases.
With both the US Labour Market Conditions Index and Consumer Credit figures set for release later in the afternoon the ‘Buck’ has remained relatively sluggish, awaiting fresh numbers to prompt a resurgence in Fed speculation and potentially shore up the currency.
GBP/USD Exchange Rate Forecast: Renewed Wave of Fed Speculation to Drive Pairing
Although the bigger influence on the outlook of the Pound over the coming week stands to be from the BoE Rate Decision and 12-month Inflation Forecast, tomorrow could see some increased movement due to the domestic Industrial Production, Manufacturing Production and Visible Trade Balance results. Indicators of a stronger UK economy are likely to do much to boost Sterling and could allow the GBP/USD pairing to properly consolidate its current gains.
Likewise the major impact of upcoming US data stands to be in its effect on investor interest rate speculation, with positive figures on Mortgage Applications, Jobless Claims or the University of Michigan Confidence Index capable of boosting the ‘Buck’.
Current GBP, USD Exchange Rates
At time of writing the Pound Sterling to US Dollar (GBP/USD) pairing is moving strongly in the region of 1.5389, while the US Dollar to Pound Sterling (USD/GPB) exchange rate is in a downtrend at 0.6497.
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