The Pound Sterling to US Dollar (GBP/USD) exchange rate softened on Thursday as market attention shifted to the Bank of England policy meeting and release of US jobs data.
On Wednesday the Pound Sterling to US Dollar (GBP/USD) exchange rate was little changed as economists await the release of data from the UK and USA. Of particular interest ti traders is the Adp Employment range report which will give a clearer indication as to whether the US jobs market is maintaining its strong momentum.
As Tuesday’s session progressed the Pound to US Dollar (GBP/USD) exchange rate slid to its lowest level in 14-months as softer than forecast UK construction PMI data weighed heavily.
Earlier on Tuesday, the Pound to US Dollar (GBP/USD) exchange rate softened slightly as the ‘Greenback’ found support from positive ISM manufacturing data and increased demand for safe havens due to the unrest in Hong Kong.
At the start of the week the Pound to US Dollar (GBP/USD) exchange rate continued to strengthen as economists deemed the currency’s recent rise as overdone and as US manufacturing PMI data disappointed.
Earlier the Pound Sterling to US Dollar (GBP/USD) exchange rate edged away from a 14-month low on Monday after it found support from a better-than-forecast UK manufacturing purchasing managers index report.
UK manufacturing activity increased more than forecast in November as domestic demand continued to bolster demand and countered the negative impacts of falling export demand from the Eurozone and emerging markets.
According to the Markit/CIP’s, the UK manufacturing PMI increased to a reading of 53.5 from the previous month’s figure of 53.3. The rise meant that manufacturing activity is at its highest level in four months and remains well above the 50 mark that divides expansion from contraction.
Sterling advanced following the data release as it suggests that a forecast slowdown in the UK economy is not likely to be as severe as previously expected. The news will be of comfort to Chancellor George Osborne as he prepares to deliver his autumn statement on Wednesday.
Inflation pressures in the manufacturing sector remained subdued as input costs fell for a third consecutive month, while output prices increased at their slowest pace since June of last year, reflecting the exchange rate and low commodity prices. Falling commodity prices are also reducing prices and inflation.
CBI data supports Pound Sterling to US Dollar (GBP/USD) Exchange Rate
Also supporting the Pound against the US Dollar and other major peers such as the Euro was a separate report released by the Confederation of British Industry (CBI). The report showed that the nation’s economy remains on a healthy trajectory with the rate of growth being stable in the three months leading up to November.
‘Previously pent-up demand delivered a strong boost to growth during the first half of the year but this effect may be fading. The UK is continuing to expand on a healthy trajectory, returning now to steadier and more sustainable growth rates,’ said CBI director of economics Rain Newton-Smith.
‘Sterling has rallied this morning after a positive manufacturing pmi figure. With the Pound steady so far on the day, this latest data has helped bolster the currency against the US Dollar and many other currencies to start the week off,’ said a forex trader.
Pound to US Dollar Exchange Rate Hit a Session High of 1.5657
As the session progressed the US Dollar came under pressure from the release of domestic PMI data. The Institute for Supply Management (ISM) said its index of national factory activity fell to 58.7 from 59 the month before.
The reading however topped expectations of a figure of 57.8.
A separate Markit compiled manufacturing PMI also came in just above forecasts with a figure of 54.8.
Pound Sterling to US Dollar Exchange Rates Today –
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate is currently trading at 1.5678
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate hit a session high of 1.5706
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate hit a session low of 1.5658
