Earlier,The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading steadily on Friday following the release of better than forecast UK public sector borrowing data and as the ‘Greenback’, remained under pressure following the Federal Reserve’s policy statement issued earlier in the week.
As Friday’s session progressed, the US Dollar weakened sharply as risk sentiment improved amid fresh hopes for progress on the Greek debt front, while the Federal Reserve’s latest policy statement continued to weigh on the ‘Greenback’.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.4922
Sterling received support from data, which showed that UK public sector borrowing came in at £6.9 billion in February; a figure that was less than the £8.4 billion figure forecast by economists and was a 34% drop on the previous year.
The fall in borrowing was a result of an increase in self-assessed tax receipts which soared by 75% from last year to a total of £4.2 billion. Income tax receipts also increased to the highest level on record at £153.9 billion, a rise of £7.1 billion from the same period in the previous year.
‘With one month of this fiscal year still to go, borrowing looks set to come in at about £89 billion, nearly £10 billion lower than last year and a touch below the OBR’s forecast of £90.2 billion in the Budget. And looking ahead, we think that there is scope for borrowing to come down at a faster rate than the OBR expects over the coming years too as the official forecasts continue to be based on some pessimistic forecasts for GDP growth,’ said Samuel Tombs of Capital Economics.
The fall in borrowing is good news for Chancellor George Osborne who has pledged to ease the nation’s deficit and lower borrowing.
US Dollar Exchange Rate Under Pressure
The US Dollar meanwhile remained under pressure from Wednesday’s Federal Reserve policy meeting in which policy makers revised down the USA’s economic growth forecasts and hinted that interest rates may not rise until September at the earliest.
The Fed dropped a reference to being “patient” on the timing of rate hikes, but added that the change in its forward guidance did not mean it has decided on the timing for an initial rate increase.
A run of disappointing economic data releases is also keeping the ‘Greenback’ in check.
The latest data, which was released on Thursday, showed that manufacturing activity in Philadelphia expanded at the slowest pace in 13 months in March.
With no market moving economic data due for release on Friday, trading volumes are expected to be light throughout the session.
