The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.16% on Monday morning.
With positive British economic data supporting speculation that the Bank of England (BoE) will be one of the first major central banks to hike the benchmark interest rate, the Pound Sterling gained versus the majority of its most traded currency competitors.
Conversely, a string of disappointing US data releases saw futures traders paring bets as to the timing of a rate revision. However, the US Dollar edged higher on Monday thanks to speculation that US data will print positively and the Federal Reserve will come under pressure to normalise policy.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5372.
Previously…
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.35% at the close of last week.
Although Friday of last week saw a reversal of the situation, in general the Pound held a position of strength against the US Dollar. This was mainly due to speculation that the Bank of England (BoE) would overtake the Federal Reserve in a rate hike cycle. However, futures traders still have the Federal Reserve hiking rates 6 months before the BoE, so the coming week will be of significance in determining who will win the race.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen on British Growth
British Gross Domestic Product data will be of significance in terms of its potential to provoke Sterling volatility. In addition, GDP will also have a marked affect on rate hike speculation, with a positive result likely to add to pressure on the BoE. Katja Hall, deputy director-general of the CBI, said: ‘UK growth continues to outshine its counterparts in Europe and progress is ‘steady as she goes.’
In terms of influential economic data, the British economic docket is somewhat sparse over the coming week. However, for those invested in the British asset, BBA Loans for House Purchase and the GfK Consumer Confidence Survey will be of interest.
Consumer confidence will be closely examined to see if low oil prices have had a significant impact on sentiment. Thus far, consumers have not enjoyed any real benefit from tanking crude.
US Dollar (USD) Exchange Rate Forecast to Fluctuate on Annualised US Growth
There will be several influential domestic data publications with the potential to provoke US Dollar movement over the coming week. One of the most significant will be Annualised US Gross Domestic Product for the fourth quarter, which is forecast at 2.1% growth, down from the previous estimate of 2.6%.
In addition to GDP; Consumer Confidence, the Consumer Price Index, Consumer Price Index ex Food and Energy, Durable Goods Orders and Personal Consumption will all be influential in terms of their potential to spark US Dollar movement.
If US data prints positively it will pressurise the Fed into hiking rates, although their recent dovish tone may overshadow data.
With the British general election fast approaching, there is the potential for the Pound to slump irrespective of data results.
In addition to the data mentioned; Existing Home Sales, S&P/Case-Shiller Composite-20, Composite PMI, Services PMI, Mortgage Applications, New Home Sales, Durable Ex Transportation, Initial Jobless Claims, Chicago Purchasing Manager Index, Pending Home Sales and the University of Michigan Confidence Survey will all be of interest to those trading with the US Dollar.
The US Dollar may appreciate in spite of domestic data results as geopolitical tensions mount. Demand for safe-haven assets could amplify if the situations in Ukraine and Libya deteriorate.
At the close of last week, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5376.
