The Pound Sterling to US Dollar (GBP/USD) exchange rate declined by around -0.34% on Wednesday afternoon.
After the Queen’s Speech reiterated the Conservative stance on pushing for an in/out referendum on Britain’s membership in the European Union, the British asset depreciated versus many of its most traded currency rivals. Sterling is likely to trend relatively statically for the remainder of Wednesday’s European session as traders await UK growth data due for publication on Thursday.
The US Dollar, meanwhile, advanced versus many of its closest competitors despite a comparatively disappointing result from the solitary domestic data publication. The appreciation can be linked to speculation that the Federal Reserve will be the first central bank in the group of seven to initiate a rate hike cycle.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5341.
Pound Sterling (GBP) Exchange Rate Forecast to Soften against the ‘Greenback’ (USD) on EU Referendum
Although the timing of the EU referendum is currently vague, given all we know is it will take place before the end of 2017, traders have already started to pull away from the British asset. As proven during the Scottish referendum, trader uncertainty and political unknowns can weigh heavily on demand for the domestic currency. Many economists will hope that the referendum is brought forward in order to reduce the damage caused by political uncertainty.
The Pound softened versus many of its competitors on Wednesday after the Queen’s speech didn’t give any indication as to the timing of the promised referendum. Additionally, there was no mention of the reforms Prime Minister David Cameron is campaigning for. The general unknowns are a hindrance on trader confidence.
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low of 1.5318 today.
US Dollar (USD) Exchange Rate Forecast to Advance against the Pound as Hawks Bring Forward Fed Bets
The tail-end of last week saw Fed Chair Janet Yellen state that a benchmark rate increase is likely before the end of the year, provided domestic data improves. A recent succession of positive data results has caused futures traders to bring forward bets as to the timing of a lending rate increase, with the probability of a December liftoff at around 61%.
US economic data printed disappointingly on Wednesday but the result wasn’t punished by traders who are looking ahead to Thursday’s labour market data. MBA Mortgage Applications declined by -1.6% in the week ending May 22nd, adding to the declination of -1.5% registered previously.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Losses ahead of Key Data
Given the absence of further domestic data publications to provoke volatility, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold losses for the remainder of Wednesday’s European session. Thursday will be significant for the GBP/USD pairing as British growth data and US labour market data is due for publication.
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced to a high of 1.5437 today.
Comments are closed.