UPDATE
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range on Friday morning.
As traders await US wage growth data, the GBP/USD conversion rate was trending narrowly. A disappointing result from British Consumer Prices data wasn’t enough to provoke a significant Sterling retreat.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5335.
Yesterday…
GBP/USD Conversion Rate Predicted to Tick Higher even after UK Mortgage Approvals Fell
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed by around 0.2% on Thursday afternoon.
Despite the fact that British economic data produced mostly positive results on Thursday, the Pound has seen quiet trade. The British asset failed to improve on overnight gains mostly as a result of Euro appreciation. Today’s economic data showed that German inflation improved beyond expectations, moving away from deflationary territory. Given that the lack of price pressures in the Eurozone was one of the primary reasons the European Central Bank (ECB) highlighted the need to ease policy, higher German inflation is a positive for those invested in the common currency.
One particularly disappointing British data publication was September’s Mortgage Approvals, which dropped for the first time since May and missed expectations of a greater number of approvals. Additionally, a disappointing result from CBI Reported Sales, which dropped to 19 in October despite the market consensus of 35, weighed on Sterling demand. ‘Growth in sales and orders for high street retailers remains resilient, but there has been a slight slowdown in the pace of that growth following a strong September,’ said Rain Newton-Smith, CBI director of economics. ‘Internet sales are starting to ramp up again as we head towards Christmas and we would expect them to continue this positive pattern until the end of the year.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5301.
USD/GBP Exchange Rate Forecast to Hold Losses after US Data Fails to Support Fed Rate Hike Hopes
After rallying significantly in the wake of a hawkish statement from Federal Open Market Committee (FOMC) policymakers, the US asset cooled versus many of its currency rivals during Thursday’s European session. Although holding a relatively strong position, the US asset could see more losses as the session progresses after domestic data failed to support hopes of a 2015 rate hike.
Third-quarter Annualised Gross Domestic Product was predicted to show growth of 1.6% but the actual result slowed to just 1.5%. Third-quarter Personal Consumption also missed the median market forecast 3.3% with the actual result hitting 3.2%. Adding to disappointment was a drop in Personal Consumption Expenditure and Pending Home Sales. Chris Williamson, an economist at Markit, stated; ‘US GDP numbers confirm broader signs that the global economy slowed in the third quarter, something which will worry policymakers, even if they are loath to admit it.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.5240 during Thursday’s European session.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Will US Data Weigh on USD?
Although there is a complete absence of British economic data on Friday to provoke volatility, the Pound has the potential to advance versus the US asset. This is because traders will likely see today’s set of disappointing data results as a sign that domestic growth is dragging and the Fed will still be hesitant to tighten policy in December.
With UK labour market conditions improving significantly of late, however, many traders are betting that the BoE will overtake the Fed in a policy tightening cycle. This could see support for the British asset over the coming weeks. However, there is also a growing number of traders who are concerned that the BoE will avoid making policy changes until more is known regarding the possibility of a Brexit from the European Union.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.5313 during Thursday’s European session.
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