Pound Sterling to US Dollar (GBP/USD) Exchange Rate Weakness Persists
On Tuesday the Pound Sterling to US Dollar (GBP/USD) exchange rate declined by a further 0.45% as the UK’s measure of the services sector was shown to have softened in December.
While a slight declination had been anticipated, the drop from 58.6 to 55.8 was considerably worse than forecast.
As the report increases the odds of the Bank of England (BoE) delaying interest rate hikes until the beginning of 2016, the Pound softened across the board in the wake of its publication.
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell to a low of 1.5148 over the course of the European session.
Earlier…
GBP/USD Exchange Rate Sheds 0.5%
After the UK’s construction PMI report was published, the Pound Sterling to US Dollar (GBP/USD) exchange rate slumped by over 0.5%.
A softer-than-expected construction print added to concerns that the slowing pace of UK growth will prevent the Bank of England (BoE) from increasing interest rates until 2016.
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell to a 17-month low of 1.5199 before trending in the region of 1.5240.
GBP/USD Exchange Rate Falls -0.25%
After sliding last week in response to the diverging policy outlooks of the Bank of England (BoE) and Federal Reserve, the Pound Sterling to US Dollar (GBP/USD) exchange rate extended declines on Monday.
The GBP/USD pairing fell an additional -0.25% to brush a low of 1.5269 as the ‘Greenback’ remained bullish amid bets that the Federal Reserve is preparing to increase borrowing costs in the first half of 2015.
In the hours ahead, the UK’s Construction PMI could have an impact on the Pound Sterling to US Dollar (GBP/USD) exchange rate.
Earlier…
The Pound Sterling to US Dollar (GBP/USD) exchange rate plummeted by over 1.2% on Friday to trend in the region of a 16-month low as a disappointing UK manufacturing report took its toll on the British currency ahead of next week’s Bank of England (BoE) interest rate decision.
GBP/USD Exchange Rate at 16-Month Low
The Pound Sterling to US Dollar (GBP/USD) exchange rate held declines throughout the European session in spite of Markit and ISM manufacturing reports for the US also missing the mark.
The US Dollar was stronger across the board and also achieved a four-and-a-half year high against the Euro.
In the view of currency strategist Richard Franulovich; ‘The main flavour, the main theme, is very much Dollar strength. The Euro you can tie back to the Handelsblatt article where Draghi’s talking about QE risk, and then we’ve had a weak UK manufacturing.’
Similarly, industry expert Jeremy Stretch noted; ‘Recent UK data suggested growth may have peaked. That supports a view that Sterling will probably weaken against the Dollar as the US economy outperforms.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate slumped to a low of 1.5352 on Friday, and further weakness could be on the horizon.
US Non-Farm Payrolls to Drive GBP/USD Exchange Rate Movement
There are a plethora of economic reports to focus on next week, and many have the potential to incite considerable movement in the Pound Sterling to US Dollar (GBP/USD) exchange rate.
Perhaps the most influential of the bunch will be the US Non-Farm Payrolls report, scheduled for publication on Friday.
The last batch of US employment data showed an unexpectedly strong surge in job creation and prompted this response from analyst Peter Boockvar; ‘How could the Fed with a straight face keep rates at zero in the face of strong job growth and now the possibility of wage inflation?’
While the US economy isn’t expected to add quite as many positions this time out, if the nation posts solid job growth it will add fuel to the Fed rate hike fire and lend the ‘Greenback’ support.
Another outperforming Payrolls report could see the Pound Sterling to US Dollar (GBP/USD) exchange rate fall beyond the 16-month trough struck this week and test fresh lows.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
Investors with an interest in the Pound Sterling to US Dollar (GBP/USD) exchange rate should also be focusing on the US Factory Orders figures, the ISM Non-Manufacturing gauge, Trade Balance stats, the ADP Employment Change figure and the Wholesale Inventories number.
UK reports will also be driving fluctuations in the GBP/USD currency pair, with the UK Markit Services/Composite PMI, House Price figures and Industrial/Manufacturing numbers being perhaps the most influential.
The Bank of England (BoE) will be delivering its interest rate decision towards the close of the week. The central bank is not expected to make any alterations to fiscal policy this time out.
On Sunday the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5330.
