The Pound (GBP) to US Dollar (USD) exchange rate fell to its lowest level in seven weeks on Wednesday after data released in the USA showed that the world’s largest economy rebounded strongly in the second quarter of the year.
Prior to the Gross Domestic Product (GDP) data release the US Dollar was already finding from support from expectations for a strong figure.
A report released by ADP also provided strength after it showed that US companies hired 218,000 new workers this month, the fourth month in a row where the number of new jobs created surpassed the 200,000 level.
The figure was below economists’ forecasts for 281,000 but that had little impact on the currency.
‘The July employment gain was softer than Junes, but remains consistent with a steadily improving job market. If current trends continue, the economy will return to full employment by 2016,’ said Mark Zandi, chief economist at Moody’s Analytics.
The strong numbers will put further pressure upon the Federal Reserve to raise interest rates after Fed Chair Janet Yellen said earlier in the month that rates could rise sooner if the recovery in the labour market continues.
The ‘Greenback’ advanced further against the majority of its major peers including the Euro after the Washington Based Commerce Department released the latest GDP figures.
According to the data GDP expanded by an annual rate of 4% as the world’s largest economy rebounded from the sharp -2.1% falls in activity seen in the first quarter of 2014. The growth was largely created by a pickup in consumer spending.
Against the Euro (EUR) the US Dollar advanced to a fresh eight-month high as inflation data out of Germany came in as forecast, highlighting the threat posed to the Eurozone by deflation.
Against the Canadian Dollar the US Dollar advanced to its highest level in one and a half months as the positive data highlighted the diverging strength of the two North American economies. Further losses for the ‘Loonie’ were restrained however after a report showed that the nations raw materials index rose more than forecast last month.
The US Dollar could make further gains as the market’s attention now turns to the outcome of the Federal Reserve’s policy meeting. The Fed’s latest interest rate decision will be revealed at 19:00pm GMT.
UPDATED 10:35 GMT 31 July, 2014
GBP/USD Exchange Rate Holds Losses
The Pound to US Dollar exchange rate maintained its weaker position during Thursday’s European session as several economic reports for the UK fell short of forecasts.
Firstly, the UK’s GfK Consumer Confidence measure failed to advance from 1 in June to 2 in July, as economists had expected.
The measure of sentiment actually slumped to -2 this month in its first decline for six months.
A second UK report revealed that domestic house price growth slowed markedly in July, easing from growth of 1.0% in June to 0.1%.
Finally, prominent Bank of England (BoE) official Ben Broadbent asserted that the UK housing market is loosing steam.
Today’s US initial jobless claims and continuing claims figures could cause further GBP/USD movement. A positive print may see the Pound gall lower.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.6874.
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,0.5918 ,
US Dollar,,Euro,0.7478 ,
US Dollar,,Canadian Dollar,1.0895 ,
US Dollar,,Australian Dollar,1.0712 ,
Pound Sterling,,US Dollar,1.6896 ,
Euro,,US Dollar,1.3373 ,
[/table]
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