The Pound Sterling to US Dollar (GBP/USD) exchange rate edged higher by around 0.20% on Thursday morning.
Having declined versus most of its major peers in response to a dovish Inflation Report from the Bank of England (BoE), the Pound has recovered most of those losses on Thursday. This can be attributed to a better-than-expected result from the RICS House Price Balance in April.
The US Dollar, meanwhile, continues to trend bearishly versus its major peers after Wednesday’s domestic data produces yet another set of disappointing results. The long succession of weak data publications has weighed on investor confidence and has seen futures traders paring bets as to the timing of a Federal Reserve cash rate increase.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5767.
Yesterday…
The Pound Sterling to US Dollar (GBP/USD) exchange rate edged higher by around 0.27% on Wednesday afternoon.
After British labour market data produced positive results on Wednesday morning, the Pound strengthened versus all of its major peers. The gains were short-lived, however, after the Bank of England (BoE) Inflation Report showed that the bank cut its growth forecast for the year.
The US Dollar, meanwhile, dived across the board after retail sales data printed disappointingly. Although the Federal Reserve is looking to move away from data-centric policy, the publication of yet more poor domestic data results has weighed heavily on demand for the US asset.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5711.
Pound Sterling (GBP) Exchange Rate Forecast to Soften versus the Euro as Inflation Report Ends Election Rally
Having advanced significantly on the news that the Conservative Party won a majority in the general election, Sterling gains tailed off after the BoE cut growth forecasts for the year from 2.9% to 2.5%. ‘The Bank of England’s latest inflation report supports financial markets’ (and our own) view that the MPC [Monetary Policy Committee] is in no rush to raise interest rates,’ said Vicky Redwood, chief UK economist at Capital Economics.
The Pound’s losses were somewhat slowed, however, thanks to impressive labour market data. Unemployment Rate, Claimant Count Rate, Average Weekly Earnings and Jobless Claims Change all either met with or exceeded median market forecast figures.
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.5632 today.
US Dollar (USD) Exchange Rate Forecast to Dive Versus the Euro after Data sees Pared Fed Bets
A long succession of disappointing domestic data results has seen the US Dollar soften versus the majority of its most traded currency rivals. Wednesday’s data was no different and the US Dollar slumped in response. Advance Retail Sales came in at 0.0% in April, failing to meet with the median market forecast of a 0.2% increase in sales.
‘It’s certainly a disappointing report,’ said Guy Berger, an economist at RBS Securities Inc. ‘We are going to need to see some of these categories that were weak in April firm up in May and June.’
The disappointing retail sales have caused futures traders to pare already delayed bets as to the timing of a Federal Reserve benchmark rate increase.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Gains despite Dovish BoE
With a lack of domestic data to curb the trend, and with increased reluctance to invest in the US asset, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.
Thursday ought to see heightened GBP/USD volatility with US labour market data due for publication.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.5747 today.
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