The Pound (GBP) rallied by over 0.30% against the US Dollar (USD) on Wednesday as investors continued to lock in profits following the ‘Greenbacks’ recent run of solid gains. The Euro too recovered some ground following comments by Germany’s Finance Minister.
Trading volumes of the US Dollar were relatively thin on Wednesday due to a lack of major domestic market moving economic data releases.
The only US data, which was published on Wednesday, was the latest US mortgage applications data.
According to the report released by the Mortgage Bankers Association, which shows both refinancing and home purchases, demand rose by 2.8% last week.
The figure was higher than the previous week’s number of 1.4% and was better than the -0.28% forecast by economists.
Despite that, the currency softened as investors embarked on a round of profit taking as the markets await the release of major data releases on Thursday and Friday.
The Euro regained ground after German Finance Minister Wolfgang Schaeuble told a European newspaper that comments made by European Central Bank Governor Mario Draghi had been ‘over interpreted’ after saying that fiscal policy could have a greater role in promoting growth in the struggling Eurozone.
“I know Mario Draghi very well, I think he is being over interpreted,” Schaeuble told the Passauer Neue Presse in an interview, adding he respected the independence of the central banker.
The single currency made gains despite economists widely forecasting that Thursday’s economic data releases will show further weakness in the 18-member currency bloc.
‘There are expectations that moves by the ECB will potentially add further downside momentum to the Euro, but the fact is we’re in wait-and-see mode. People are taking some of their positions off the table and taking profit,’ said a senior global currency strategist at BNP Paribas SA.
Against the Canadian Dollar (CAD) the ‘Greenback’ softened for a second consecutive day after Burger King Worldwide Inc. bought Tim Hortons Inc, to create the third-biggest fast food company in the world.
Pound Sterling US Dollar (GBP/USD) Exchange Rate Forecast
With a lack of major UK data due for the rest of the week the GBP/USD exchange rates movements will depend upon the release of key data out of the world’s largest economy.
Thursday will see the publication of the latest Jobless Claims, Pending Home Sales and second Gross Domestic Product (GDP) estimate, all of which will have an impact upon the strength of the US Dollar.
Economists are widely forecasting that GDP will recover from the previous reading of -2.1% to 3.9% in the second quarter, a stronger figure than that and we will see the ‘Greenback’ likely surge against its major peers.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6030 ,
US Dollar,,Euro,0.7591 ,
US Dollar,,Canadian Dollar,1.0896 ,
US Dollar,,Australian Dollar,1.0704 ,
Pound Sterling,,US Dollar,1.6568 ,
Euro,,US Dollar,1.3181 ,
[/table]
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