The Pound Sterling to US Dollar (GBP/USD) exchange rate strengthened by around 0.45% on Wednesday morning.
As traders await Bank of England (BoE) Governor Mark Carney’s speech later on Wednesday morning, the Pound edged higher versus most of its major peers. Most experts believe that the Governor will emulate Tuesday’s speech in which he said that British businesses need to pay higher wages.
The US Dollar, meanwhile, cooled slightly after Federal Reserve Chair Janet Yellen disappointed hawks with a relatively dovish speech on Tuesday. Data due later on Wednesday afternoon has the potential to provoke volatility.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5526.
Yesterday…
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending within a narrow range on Tuesday morning.
Whilst traders await key US data, the North American asset strengthened versus many of its major peers. The appreciation can be attributed to speculation that the Federal Reserve will soon abandon dovish rhetoric when talking about monetary policy.
The Pound, meanwhile, is holding in a position of strength versus most of its major currency rivals. Although there is an absence of domestic data to provoke changes, expectations that the situation in Greece will be resolved is Sterling positive. Additionally, a victory for austerity may be a strong deterrent for anti-austerity parties based in the UK.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5440.
Pound Sterling (GBP) Exchange Rate Hold Gains on Anti-Austerity Victory
After many elaborate speeches condemning the repercussions of austerity, Greece’s Prime Minister, who was elected for his stance on austerity incidentally, has bowed to the collective force. This little victory is significant as it may act as a deterrent for a growing number of anti-austerity political parties emerging within the Eurozone.
As the UK nears the general election, fears that the controversial political party UKIP will gain power caused an initial Sterling slump. One of UKIP’s main objectives would be to remove the UK from the European Union. However, those fears have eased substantially thanks to a recent media smear campaign against the party in addition to the Eurogroup’s victory for austerity.
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low today of 1.5427.
US Dollar (USD) Exchange Rate Edges Higher ahead of Yellen Speech
There will be several influential data publications pertaining to the US released on Tuesday afternoon. With many Fed policymakers saying rate revisions will be subject to data, hawks will be hoping for positive results. Consumer Confidence will be of particular interest as it will show whether low oil prices have had an impact on sentiment.
Federal Reserve Chair Janet Yellen will give a speech to a Senate Bank panel in Washington later on Tuesday. Many traders predict that she will face pointed questions from the Senate after having delayed a rate revision for such a long period. Whatever the outcome, she is likely to retire tired rhetoric like ‘patience’ with regards to hiking the benchmark rate.
‘We find it hard to imagine Yellen will promote the ‘lower for longer’ mantra that was espoused in the minutes and instead expect she will diminish the weight of that view,’ said Thomas Porcelli, chief US economist at RBC Capital Markets.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate
With important US data and a Yellen speech to come, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to fluctuate. There is also the potential for volatility on Wednesday as both the Governor of the Bank of England (BoE) and the Chair of the Fed will be making speeches. Wednesday’s British and US data may also provoke changes for GBP/USD.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high today of 1.5466.
