The Pound Sterling to US Dollar (GBP/USD) exchange rate has been trending lower as the US currency continues to be bullish, with more gains forecast.
The US will publish highly influential Unemployment Rate and Change in Non-Farm Payrolls figures which could see the US Dollar exchange rate rally higher against other currency majors.
Industry expert Takako Masai commented: ‘It’s hard to imagine a weak payrolls report.’
Pound Exchange Rate (GBP) Sinks as BoE Keeps Interest Rates the Same
In Thursday’s session… The The Pound Sterling to US Dollar (GBP/USD) exchange rate has been trending lower as the Bank of England (BoE) kept interest rates the same and US Initial Jobless Claims fell below 300K.
Economist Gregory Daco commented: ‘Overall the picture of labour is one of ongoing payroll gains and gradually firming wage growth.’
Friday will be an influential day for the GBP/USD exchange rate with the release of the Bank of England (BoE) 12-Month Inflation Expectations and US Unemployment Rate and Change in Non-Farm Payrolls.
Earlier in the session… The Pound Sterling to US Dollar (GBP/USD) exchange rate remained bearish after the Bank of England (BoE) announced another month of stability in UK interest rates.
Hawkish investors who had hoped for an increase in borrowing costs by the close of 2015 were disappointed, and a dovish Bank of England continually leaves the markets guessing.
However, industry expedrt Neil Woodford has warned that a rate hike in 2015 would be a ‘mistake’.
Woodford stated: ‘Many economists and market commentators continue to believe UK interest rates will rise next year, but if they do I think it will price to be a mistake. I see no reason for rates to rise in 2015, probably much longer.’
Bank of England Keep Rates Stable – Pound Exchange Rate (GBP) Falls
The Pound Sterling to US Dollar (GBP/USD) exchange rate extended its losses in Thursday’s trading after the Bank of England (BoE) chose to keep interest rates at the current 0.50% benchmark.
In the weeks to come, the central bank will release its meeting minutes which could see major Pound Sterling to US Dollar movement as details of the Monetary Policy Committee’s (MPC) most recent vote comes to light.
Another split vote could cause a Pound Sterling rally; however, if two of the hawkish policymakers return to the dovish side, the British currency could flop.
Beige Book Suggests Us Employment ‘Widespread’ US Dollar Supported
Earlier… The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending lower at the open of Thursday’s session after the Federal Reserve released its Beige Book.
The Beige Book stated that hiring throughout the USA had picked up dramatically, despite wage growth stagnating.
The report stated: ‘Employment gains were widespread.’
The positivity gleamed from the Beige Book offered some US Dollar support.
In Wednesday’s session… The Pound Sterling to US Dollar (GBP/USD) exchange rate remained steady in the second half of Wednesday’s trading despite the US ISM-Non-Manufacturing Composite Index gaining in November.
The index had been forecast a small leap from 57.1 to 57.5–however the actual figure printed at a highly favourable 59.3. Furthermore, the ecostat comes at a time when there is great uncertainty for the outlook of world economy. With many economists’ speculating that a slowdown is taking place, the US economy appears to be progressing quite consistently.
Economist Joel Naroff commented: ‘The world economy may be faltering, but that is not stopping the US economy from improving.’
US Labour Market Creates 208K vs 222K Forecast – US Dollar Exchange Rate (USD) Softer
Earlier in the session… The Pound Sterling to US Dollar (GBP/USD) exchange rate held onto gains made earlier in the session after US Employment Change figures showed the economy created less jobs than expected.
208K jobs were added in November, falling short of the 222K forecast. In addition, MBS Mortgage Applications contracted by -7.3% after the previous -4.3% fall.
Industry expert Carlos Rodriguex commented: ‘November continued to show solid job growth above 200,000. Small businesses continued to drive jobs gains adding almost half the total for the month.’
Federal Reserve the First to Hike Interest Rates?
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced during the first half of Wednesday’s trading after the UK published favourable figures.
However, the US Dollar could become bullish against other currency majors if the Federal Reserve changes its tone in the next meeting.
Forex expert Steven Barrow commented: ‘We will probably see a shift in the Fed’s language at the meeting this month.’
Furthermore, the Federal Reserve could be the first in the Group of Seven (G7) developed nations to raise interest rates since the onset of the global financial crisis.
An expert in the field, Yasuhiro Kaizaki commented: ‘Optimism over the economic outlook is fuelling Dollar buying.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in a narrow range early in Wednesday’s European session; however, Markit released a highly favourable UK Services Purchasing Managers Index (PMI) which may see the British currency rally.
Markit Services and Composite PMI Rise, Pound Sterling (GBP) Exchange Rate Supported
The UK services index rose to 58.6 in November from 56.2, bypassing economists’ forecasts for a smaller jump to 56.5. As a result, the Composite Index also rose above predictions from 55.8 to 57.6.
The services report read: ‘November’s survey of the UK service sector indicated a strengthening of activity growth amid reports of firm demand and rising volumes of new business. Capacity subsequently remained under pressure, leading to a further increase in levels of work outstanding, and companies responded by adding to their payroll numbers.’
Pound Sterling to US Dollar (GBP/USD) Currency Pair Awaiting US Figures
Wednesday is shaping up to be an interesting day for the GBP/USD exchange rate, with the release of US ISM Non-Manufacturing Composite figures still to come. The index is expected to rise from 57.1 to 57.5 in November, a result which could place more pressure on the Federal Reserve to raise rates and could subsequently see the US Dollar strengthen.
Monday saw the ISM Manufacturing Index dip but remain higher than economists’ had forecast. The index resided at 59 in October and fell to 58.7 in November. The data saw US factory activity hit a 10-month low.
Markit economist Chris Williamson stated: ‘With inflow of new orders slowing sharply, there’s a good chance that production growth will deteriorate further in December.’
Federal Reserve Closer to Hiking Rates?
However, despite Monday’s weaker figure, Federal Reserve officials are showing confidence in the US economic recovery, which heightens speculation regarding the timeframe for interest rate hikes in the US.
Vice Chairman Stanley Fischer suggested that the Fed was approaching a language change which would do away with the highly predictable comment that rates will stay low for a ‘considerable time’.
Economist Torsten Slok commented: ‘FOMC members are a little bit challenged by the fear that they don’t want to rattle markets. It makes sense for them to proceed with caution.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The Pound Sterling to US Dollar exchange rate could see major movement on the release of US data later in the session. However, Wednesday could be another intriguing day for the GBP/USD currency pair with the Bank of England (BoE) interest rate announcement.
Despite the fact that it is considered highly unlikely the central bank will raise rates after a string of unfavourable UK data, the interest rate decision still has the power to move markets. Furthermore, the meeting minutes released later in December will indicate if another split vote occurred amongst the Monetary Policy Committee (MPC).
The Pound to US Dollar (GBP/USD) exchange rate is presently trending in the region of 1.5647 while the USD/GBP currency pair resides at 0.6394.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound,
,US Dollar , 1.5648,
Euro,,US Dollar , 1.2341,
Canadian Dollar,,US Dollar , 0.8782,
Australian Dollar,,US Dollar , 0.8414,
New Zealand Dollar,,US Dollar , 0.7769,
[/table]
