The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a tight range on Friday morning.
After British data produced mixed results, the Pound is generally holding steady versus the majority of its most traded currency rivals. A slight declination is the result of trader profit locking after Thursday’s surge opened some attractive selling positions.
The US Dollar, meanwhile, is also generally static versus most of its major peers. After a succession of disappointing domestic data results, today’s University of Michigan Confidence index will be of heightened significance.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5392.
Pound Sterling (GBP) Exchange Rate Holds Steady on Mixed Data
Domestic data had little impact on the Pound on Friday as results were mixed. Monthly Construction Output was forecast to rise by 2.7% in December following November’s -1.8% drop, but the actual result was an increase of just 0.4%. Year-on-year Construction Output, however, managed to equal the median market forecast of a drop from 5.8% to 5.5%.
Sentiment towards the British asset remains high, however, after Bank of England (BoE) Governor Mark Carney hinted towards a rate hike taking place in the near future. Many are now speculating that the BoE will increase rates before the Federal Reserve.
‘The market understands in general what the MPC is trying to do,’ Carney said. ‘It’s pretty clear … that the most likely next move in monetary policy is an increase in interest rates.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low today of 1.5393.
US Dollar (USD) Exchange Rate Static ahead of Confidence Data
After softening considerably in response to disappointing retail sales data, the US Dollar is holding steady versus the majority of its most traded currency rivals. Rate hawks will be hoping that the University of Michigan Confidence data equals or betters the market consensus of 98.1 as a poor result will ease pressure on the Fed to hike rates.
Thursday’s disappointing retail sales data is certainly weighing on demand for the Dollar. ‘Overall, the tone of this [retail sales] report was disappointing as it points to a weak start to spending activity this year, despite the significant boost to disposable income from lower gasoline prices,’ Millan Mulraine from TD Securities told Reuters
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate
The US confidence data is likely to cause volatility, so the Pound Sterling to US Dollar (GBP/USD) exchange rate has the potential to fluctuate later on Friday. An absence of influential data until Tuesday of next week should see the GBP/USD exchange rate enjoy a calm period.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high today of 1.5419.
