The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in a narrow range on Tuesday ahead of UK inflation figures.
The Consumer Price Index (CPI) is expected to decline from 0.5% to 0.4%.
Earlier… The Pound Sterling to US Dollar (GBP/USD) recorded modest gains on Monday after UK House Prices recorded 2.1% growth in February.
However, the year-on-year ecostat took a dive from 8.2% to 6.6%.
The Pound Sterling to US Dollar (GBP/USD) exchange rate remained in a tight range on Friday despite a significant drop in the University of Michigan Confidence index.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Remains Stable Despite Confidence Drop
The February ecostat declined from 98.1 to 93.6, falling from an 11-year high. The softness was accredited to plummeting oil prices; as the price of gas depreciates, dismissals have been taking place at oil producers and many citizens expect the labour market to take a slight downturn.
Director of the Michigan Survey of Consumers commented: ‘Low gas prices have especially helped lower-income households, although consumers now widely anticipate that gas prices will edge upward during the year ahead.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
Meanwhile, the coming week could see significant swings in the US Dollar to Pound Sterling (USD/GBP) exchange rate, with Tuesday kicking off the weighty data releases. The UK Consumer Price Index (CPI) will be published on Tuesday and could come under close scrutiny after this week’s Bank of England (BoE) inflation report.
Governor Mark Carney suggested that inflation could dip below 0.0% in coming months as the tumbling price of oil weighs on economies the world over. Forecasts expect the headline inflation figure to drop slightly from 1.30% to 1.25%.
The US Empire Manufacturing and NAHB Housing Market Indexes will be out on Tuesday. US Federal Reserve officials are also scheduled to speak throughout the week and any hawkish remarks could encourage the US Dollar to Pound Sterling (USD/GBP) exchange rate to rally.
Wednesday will be another big day for Pound Sterling movement when the UK Unemployment Rate and Employment Change figures surface. Forecasts suggest joblessness will remain at 5.8% in December and could offer the Pound some stability.
However, the influential events don’t stop there; the Bank of England meeting minutes will also be out and will offer insight into the inner workings of the Monetary Policy Committee’s (MPC) interest rate decision. A split vote could see the Pound rally—however that eventuality is deemed unlikely.
The Federal Reserve is also scheduled to publish its own meeting minutes on Wednesday, which could be another factor to influence GBP/USD movement. The Fed is currently pegged to be the first central bank in the group of seven (G7) developed nations to hike rates since the onset of the global financial crisis.
Markit’s US Manufacturing Purchasing Managers Index (PMI) will be out on Friday.
Thursday’s US initial Jobless Claims and Continuing Claims stats could offer the US Dollar to Pound Sterling (USD/GBP) exchange rate a boost if more favourable than this week’s figure, which printed out of line with forecasts.
Any developments in UK politics in the run up to the May general election has the power to influence the Pound Sterling exchange rate. Markets don’t favour uncertainty, and as the UK could undergo a major political shakeup in coming months, the British currency is likely to be volatile.
UK Retail Sales stats will emerge on Friday and could help the Pound regain some strength in the GBP/USD exchange rate if upbeat.
On Sunday the Pound Sterling to US Dollar (GBP/USD) exchange rate was trading in the region of 1.5424
