The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range on Wednesday afternoon.
With May’s general election having a marked impact on investor confidence, or lack thereof, the Pound softened versus the majority of its most traded currency rivals. A complete absence of data to curb the trend has seen a continued Sterling declination.
The US Dollar, meanwhile, saw some of its gains pared after domestic data produced mixed results.
Fears of ‘Greenback’ (USD) overvaluation compounded the downtrend.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4781.
Pound Sterling (GBP) Exchange Rate Slides on Lack of Data
As explained above, the Pound continued declination initiated earlier in the week thanks to a complete absence of domestic data to curb the trend. Thursday is likely to see more of the same with another sparse economic docket in terms of British data.
With the general election weighing on investor confidence amid fears of a dramatic policy overhaul, the Pound is unlikely to sustain any significant gains until its conclusion. The potential for a hung parliament and a British exit from the Eurozone is hindering investment.
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.4698 today.
US Dollar (USD) Exchange Rate Ticks Lower on Mixed data
With US data producing mixed results, which err towards negativity, the US Dollar softened versus many of its most traded currency rivals. MBA Mortgage Applications declined by -2.3%, down from the previous 0.4% growth registered. Also aiding the US Dollar downtrend was March’s Industrial Production, which declined by -0.6%, failing to meet with the median market forecast of -0.3%.
‘US March industrial production data does not provide any consolation after yesterday’s poor retail sales figures. Consensus was for a weak 0.3% mom decline, but managed to exceed even this on the downside with a 0.6% mom fall,’ stated Rob Carnell of ING.
Peter Boockvar, managing director at the Lindsey Group, said, ‘Bottom line, this data point just further confirms the soft Q1 for the US economy and we’ll see what kind of rebound we’ll see in Q2, which should happen with the degree being the only question.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Steady
Given the lack of domestic data to curb the trend, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold steady for the remainder of Wednesday’s European session. With that being said, however, the Federal Reserve Beige Book may impact upon US Dollar movement.
Thursday should see plenty of GBP/USD volatility with US labour market data due for publication.
Yet another day absent of British data could see the Pound continue to decline.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.4813 today.
