The Pound Sterling to US Dollar (GBP/USD) exchange rate ticked higher by around 0.12% on Wednesday morning.
With Bank of England (BoE) minutes due for publication later on Wednesday morning, the Pound is generally holding steady versus the majority of its most traded currency competitors. Should the minutes provide hawkish notes the Pound will likely surge, although it is unlikely to sustain gains with the general election weighing on investor appetite.
The US Dollar, meanwhile, softened versus most of its major peers ahead of domestic data. The general declination can be attributed to futures traders paring bests as to the timing of a Federal Reserve rate hike after a succession of disappointing data results.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4945.
Yesterday…
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.21% on Tuesday morning.
As the general election draws ever closer, the Pound softened as traders fear a significant policy overhaul. With a complete absence of domestic data to provoke changes, the Pound continues to edge lower amid political uncertainty.
The US Dollar, meanwhile, ticked higher versus most of it major peers. The advance can be linked to rising demand for safe-haven assets as geopolitical tensions in Greece reach boiling point. The gains have been sluggish, however, amid speculation that the recent run of disappointing data results will see the Federal Reserve delay a benchmark rate increase.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4876.
Pound Sterling (GBP) Exchange Rate Edges Lower on Political Uncertainty
Given that there has been a distinct lack of British economic data thus far this week, the general election has been dominating trade. This continues on Tuesday with a complete absence of domestic data to provoke Sterling movement.
The forthcoming general election is thought to be one of the most closely contested in modern political history as UK citizens have the choice between very different policies. This is evidenced by opinion polls which are giving many, varied results. The only common ground between the different polls is that none are giving a clear majority for any party. The prospect of a new coalition or hung parliament is weighing on investor confidence, with the potential for a massive policy overhaul increasing in likelihood with more political forces in power.
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low of 1.4854 today.
US Dollar (USD) Exchange Rate Gradually Climbs on Safe-Haven Demand
The ongoing tensions in Greece have had a marked affect on trader risk-appetite, or lack thereof. With the US unhappy with a Greek law that could see a disabled terrorist released from captivity, the European Central Bank (ECB) showing increased reluctance to give aid, Russian gas company Gazprom heading to Greece to offer aid and Athens demanding money from local governments, it is not surprising that economists are increasing bets on a Greek exit from the Eurozone with every passing day.
All this has caused heightened demand for safe-haven assets, a demand aided by low oil prices and poor data out of China. As a safe-haven asset, the US Dollar has benefitted from the geopolitical upheaval.
The gains have been generally weak, however, as economists pare bets as to the timing of a Federal Reserve rate hike after a succession of less-than-ideal domestic data results.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Losses
Although speculation of Fed rate hike delays is weighing on demand for the North American asset, the general election is having a greater detrimental effect on the British asset. Therefore, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold losses for the remainder of Tuesday’s European session. This is compounded by the fact that there is a complete absence of domestic data pertaining to either nation.
Wednesday will see greater GBP/USD volatility with Bank of England (BoE) minutes from their most recent policy meeting due for publication. There will also be several influential US data reports of interest to those invested in the ‘Greenback’ (USD).
The Pound Sterling to US Dollar (GBP/US) exchange rate advanced to a high of 1.4910 today.
