The Pound Sterling to US Dollar Exchange Rate is forecast to weaken and trade in the region of a 14-month low as economists expect US jobs data to come in positively on Thursday and Friday.
As Wednesday’s session progressed the Pound to US Dollar (GBP/USD) exchange rate strengthened away from a 14-month low after PMI data showed that the UK’s dominant service sector expanded more than forecast in November, further gains were restrained however as a number of Federal Reserve policy makers delivered upbeat comments and as an ISM non-manufacturing report came in better than expected.
The Pound to US Dollar (GBP/USD) exchange rate is forecast to remain close to a 14-month low as economists turn their attention to upcoming US employment data. Positive construction data released on Tuesday was also continuing to support the ‘Greenback’.
The Pound to US Dollar (GBP/USD) exchange rate declined to its lowest level since September 2013 on Tuesday as UK construction PMI data weighed heavily and increased concerns that the UK economy will experience a slowdown over the coming months.
The US Dollar found support from the release of a report which showed that a ISM New York PMI report came in better than forecast.
Also supporting the ‘Greenback’ was a report released by the Commerce Department which showed that construction spending across the USA increased by 1.1% to an annual rate of $970.99 billion, the biggest increase seen since May.
According to the report compiled by Markit/CIPS, construction activity expanded at its slowest pace in more than a year in November as optimism in the sector waned and as order books filled at the slowest rate since June 2013.
The Purchasing Managers Index (PMI) fell to a reading of 59.4; the weakest reading recorded since October 2013 and was down from the preceding month’s strong figure of 61.4. Economists had been forecasting that the PMI would come in with a reading of 61.0. Despite the softening, the index remains above the 50 level that divides contraction from expansion.
‘A less favourable overall economic news flow was cited as the key factor dampening otherwise buoyant demand patterns across the UK construction sector. However, some construction companies noted that uncertainties ahead of next year’s general election had weighed on business confidence and influenced clients’ willingness to commit to new projects,’ said Markit senior economist Tim Moore.
The US Dollar exchange rate meanwhile remained supported by Mondays positive Institute for Supply Management (ISM) data that showed that manufacturing activity in the world’s largest economy remained robust in November.
ISM said on Monday that its index of purchasing managers fell to 58.7 last month from a reading of 59.0 in October. Analysts had expected the manufacturing PMI to decline to 57.9 in November.
The US Dollar could make further gains later in the session if the latest chain store sales, ISM New York Index and Construction Spending data come in positively. Economists are expecting all of those reports to show signs of improvement.
Economists will also be looking ahead to Wednesday’s ADP Employment Change data and ISM non-manufacturing PMI and Markit compiled Composite PMI data.
Pound Sterling to US Dollar Exchange Rates
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate was trading in the Region of 1.5673
The Pound to US Dollar (GBP/USD) Exchange Rate Reached a Session High of 1.5706
The Pound to US Dollar (GBP/USD) Exchange Rate Reached a Session Low of 1.5658
