The Pound Sterling (GBP) to US Dollar (USD) exchange rate softened on Tuesday following the publication of another round of positive US data.
Earlier in the session, the Pound was trading lower against the US Dollar after data showed that UK public sector borrowing increased more than forecast on a year on year basis.
According to the Office for National Statistics, the amount of borrowing rose by £700 million to a total of £11.6 billion compared to August 2013.
Also putting some pressure upon the Pound was the publication of a report by the British Bankers Association that showed that the number of mortgages approved in the UK in August slipped from 42,715 to 41,588. Economists had been forecasting for a rise to 42,900.
It then regained some ground after the US Dollar softened on the back of a round of profit taking. Investors were taking advantage of the currency’s recent strong rally.
In the afternoon, the ‘Greenback’ once again managed to push higher against Sterling and other major peers.
Data released by Markit showed that manufacturing activity in the world’s largest economy remains strong. The flash Purchasing Managers Index (PMI) for September came in with a reading of 57.9, a number that was broadly in line with economist expectations.
‘At 57.9 in September, the seasonally adjusted Markit flash US Manufacturing PMI remained well above the neutral 50.0 value, to indicate a robust improvement in overall operating conditions across the manufacturing sector. Moreover, the headline Manufacturing PMI index which is designed to signal changes in prevailing business conditions in the US manufacturing sector held at the same level as Augusts 52-month high,’ said Markit in a press release.
The US Dollar received further support from a separate report, which showed that business activity in the nation picked up last month.
The headline-manufacturing index jumped unexpectedly to a figure of 14 from 12 in September.
Taking some of the edge off the positive US Data was the release of a separate report, which showed that house prices in the US eased by 0.1% on a seasonally adjusted basis in June.
The currency was also under some pressure from concerns over the escalating conflict in Syria and Iraq.
US warplanes in conjunction with a number of Arab allies launched airstrikes against the Islamic State overnight and for the first time launched attacks inside Syria.
Pound Sterling to US Dollar exchange rate forecast
The GBP/USD exchange rate is forecast to remain range bound for most of the week due to a lack of market moving data due for the UK currency. The ‘Greenback’ could make further gains on Wednesday if the latest Home Sales and
Mortgage Applications data comes in positively. As usual, traders will also be keeping a close eye on Thursday’s US Continuing and Initial Jobless Claims figures.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6112 ,
US Dollar,,Euro,0.7775 ,
US Dollar,,Canadian Dollar,1.1046 ,
US Dollar,,Australian Dollar,1.1308 ,
Pound Sterling,,US Dollar,1.6355 ,
Euro,,US Dollar,1.2859 ,
[/table]
