The US Dollar recovered some ground against the Pound which retreated from a two-year high after a Bank of England policy maker warned that inflation in the UK has fallen sharply.
BoE policy maker Martin Weale said that there has been a ‘sharp and unexpected decline’ in inflation in the UK since the summer. Addressing the National Institute of Economic and Social Research Weale warned that the easing in inflation is likely to see the BoE maintain its forward guidance policy. Sterling was also weakened after traders said that the currency’s recent strong performance was ‘overdone’.
The US Dollar meanwhile found support after politicians unveiled a budget agreement which will avoid a repeat of the federal government shutdown and impasse seen earlier in the year. The deal should avoid any drama when the funding authority ends on the January 15th deadline. Congress will still need to reach a deal to raise the U.S. debt ceiling in February 2014 in order to avert a default.
Also supporting the ‘Greenback’ is the growing expectation that the Federal Reserve will choose to taper its monetary easing programme at next week’s policy meeting. A recent string of positive data releases has shown that the world’s largest economy is improving steadily. Last week’s unemployment data showed that the jobless rate fell to 7%.
In a separate report released on Wednesday there was more positive news for the US economy. According to the Mortgage Bankers Association Index applications for mortgages climbed more than expected last week. The index climbed 1% after plunging to -12.8% in the previous week as a result of the Thanksgiving holiday season.
Against the Euro the US Dollar weakened after the single currency found support as expectations for further monetary easing by the European Central Bank dimmed after the bank sounded less dovish than expected at last week’s policy meeting.
The Canadian Dollar meanwhile pushed higher against the majority of its peers as commodity prices continued to rise.
US Dollar (USD) Current Exchange Rates
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6099
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7249
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0593
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6398
The Euro/ US Dollar Exchange Rate is currently in the region of: 1.3790
(Correct as of 14:30 pm GMT)
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