The Pound Sterling to US Dollar (GBP/USD) exchange rate was continuing to trade in the region of 1.50 on Thursday as economists await the release of the Bank of England’s (BoE) latest interest rate decision.
Expectations are high that the BoE will leave interest rates unchanged due to the release of a string of weaker than forecast PMI reports.
The UK is experiencing a slowing of its economy and traders are raising their bets that the central bank will now not hike rates until late in the year.
The weakness of the Eurozone and concerns over the broader global economy has been blamed for the slowdown.
In comparison the US economy (the world’s largest) continues to outperform its peers. In recent weeks, the currency has surged to multi year highs against a number of other currencies as economic data continues to support the ‘Greenback’.
Wednesday’s ADP National Employment Report showed that the USA’s private sector created 241,000 new jobs in the final month of last year, a figure that was well above economist forecasts for a rise of 227,000.
‘The ADP job survey has showed consistently strong job growth in the second half of 2014, well above that needed to keep up with growth in the labour force. As a result, the US is slowly re-employing those who lost their jobs during the Great Recession and reducing the amount of labour market slack,’ said economists Gus Faucher and Start Hoffman from PNC economics.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
Sterling is expected to weaken further against the US Dollar over the course of Thursday’s session as the Bank of England is expected to maintain its monthly quantitative easing programme at £375 billion and leave interest rates at 0.5%.
Investors will focus on the monetary policy statement also due to be released and will be looking for any clues that the bank is becoming more dovish over the UK economy’s prospects.
If that is what they glean from the report then the Pound is highly likely to weaken further against the US Dollar and other major currency peers.
