GBP/USD Conversion Rate Predicted to Advance Today despite Weak British Data
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by around 0.3% on Monday afternoon.
Despite the fact that British economic data produced disappointing results on Monday, the Pound advanced versus many of its currency rivals. The appreciation can be linked to ongoing positive sentiment following last week’s economic state visit from Chinese President Xi Jinping. The visit revealed the President’s intentions to invest heavily in British infrastructure. China will support the UK’s nuclear energy plans and also invest in the program designed to reintroduce the North of England as a manufacturing power-player on the global stage.
Monday’s data printed disappointingly. September’s Loans for House Purchase data and reports from the Confederation of British Industry failed to meet with respective median market forecasts. ‘Given the long-time lags involved between changes in export prices and overseas demand, the (strong) Pound will keep orders weak for months to come,’ said Samuel Tombs, chief UK economist at Pantheon Macroeconomics. He added: ‘The worst is not over for the manufacturing sector; Sterling’s further appreciation over the last year will continue to depress export orders until mid-2016, at least.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5363.
USD/GBP Exchange Rate Forecast to Soften after Dallas Fed Manufacturing Slumped
US data produced disappointing results on Monday which sent the US Dollar trending lower versus its major peers. On the month, September’s New Home Sales contracted by -11.5% which was significantly greater than the market consensus of a -0.6% contraction. October’s Dallas Federal Reserve Manufacturing Activity contracted by -12.7 which was also much greater than the -6.5 predicted.
In response to the disappointing house sales data Mike Englund, chief economist at Action Economics LLC, believes the one-year low score is temporary, stating; ‘We assume credit availability remains a major problem for the market,’ said Englund, who is among the best forecasters of new-home sales over the past two years, according to data compiled by Bloomberg. Overall ‘We see a broad, slow but positive growth pace for the housing sector.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.5307 today.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: FOMC Rate Decision in Focus
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 gains for the remainder of Monday’s trade. Tuesday is likely to see significant GBP/USD volatility with third-quarter British Gross Domestic Product due for publication. Tuesday’s economic docket will see a number of influential US data publications as well. September’s US Durable Goods Orders and October’s Consumer Confidence will cause US Dollar movement, especially given the report’s close proximity to the Federal Reserve interest rate decision.
Wednesday will see the Federal Open Market Committee (FOMC) interest rate decision which should cause significant market movement. Although very few economists expect the FOMC to move on rates at this juncture, some expect the accompanying press conference to be hawkish in tone. Now that the People’s Bank of China (PBoC) has eased policy, the global economic situation is set to improve. This leaves fewer excuses for FOMC policymakers to hold off from hiking the benchmark interest rate.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.5382 during Monday’s European session.
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