The Pound Sterling (GBP) to US Dollar (USD) exchange rate is sliding as a Bullish US Dollar regains ground lost after Friday’s US Non-Farm Payrolls release. Despite low investor confidence, Pound Sterling is managing to make significant gains on many of the major currencies, but is being pushed down by a charging ‘Buck’ (USD).
GBP/USD Exchange Rate Forecast: Pound Sterling Strong, US Dollar Stronger
Pound Sterling has suffered from numerous economic and political troubles recently, with poor Markit manufacturing and construction PMIs adding to worries over the state of the UK economy last week. Services has continued to perform well, with the composite PMI showing that the industry is picking up the slack from other sectors, but the data highlights a worrying split in the UK economy.
Despite its weakness, Euro correction and a bullish US Dollar have left plenty of ground for Pound Sterling to advance into, appreciating 0.6% against the Australian Dollar (AUD), 0.7% against the Canadian Dollar (CAD), 1.3% against the New Zealand Dollar (NZD) and 1.6% against the Norwegian Krone (NOK).
The GBP/USD Exchange rate is currently trending in the region of 1.5072.
USD/GBP Exchange Rate News: US Dollar Bullish as Fed Interest Rate Hike Probability Hits 80%
Recent data releases, while positive for the US economy, have pushed the ‘Buck’ down as the likelihood of an interest rate hike by the Federal Open Market Committee (FOMC) increased to 80%. Trader appetite for the US Dollar has remained cool as investors wait for the FOMC meeting, scheduled for the 15th-16th of December. As a result the safe-haven ‘Greenback’ has been bearish against the major currencies, allowing higher-yield assets such as the Australian Dollar (AUD) and New Zealand Dollar (NZD) to advance.
The current strength was triggered by a surprise monetary policy decision from the European Central Bank (ECB) on Thursday, which saw policymakers cut the deposit rate by only ten basis points and extend the duration, but not the scale, of quantitative easing. Investors had been braced for much more severe measures and so flocked back to the Euro. The resulting volume of trades saw the common currency shoot up against the major currencies and the overlooked US Dollar slumped.
Today’s bullish rise comes as the post-decision excitement fades and investors return their attention to the Fed’s interest rate decision.
According to Fed Chair Janet Yellen: ‘When we put it all together we’re still seeing an overall picture of slightly above trend growth and ongoing improvements in the labour market. Obviously there are risks that come from the global environment that we have monitored carefully, but overall we’re on a solid course.’
The USD/GBP exchange rate is currently trading between 0.6616 and 0.6642.
GBP/USD Exchange Rate Forecast: UK Production Stats Could Help Allay Economy Fears
It’s a quiet day for US data tomorrow, but USD/GBP exchange rate strength could be eroded by UK industrial and manufacturing figures, although given the poor results of the Markit PMIs for the sectors, the chances are that the data will print poorly and Pound Sterling will slide further.
The GBP/USD exchange rate is currently trending between 1.5053 and 1.5115.
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