The Pound dropped against its US rival during European trading on Friday as positive US data and less-than-impressive UK reports pushed Sterling lower.
The British asset declined against the ‘Greenback’ as a gauge of UK confidence fell despite economists’ expectations for improvement.
Losses were extended as separate figures revealed a swelling in the UK’s budget deficit.
Given the strong UK employment and retail sales figures seen earlier this week the results were disappointing and prompted this response from one London-based forex strategist; ‘Normally we would have expected the deficit to have closed up somewhat but that hasn’t been the case so it does risk the deficit widening out once again. That could be a longer-term drag for Sterling. ‘
Meanwhile, the US Dollar continued to enjoy underlying support in the aftermath of Wednesday’s surprising Federal Open Market Committee announcement and was able to advance further as the US economy was shown to have expanded by more-than-anticipated.
The US economy strengthened by an annualised 4.1 per cent in the third quarter rather than expanding by the 3.6 per cent initially estimated.
Personal consumption rose 2.0 per cent in the third quarter, more than the 1.4 per cent forecast.
The unexpectedly impressive result supports the case for the Federal Reserve opting to taper stimulus and may heighten speculation surrounding the prospect of tapering continuing in the New Year.
As a result of the upbeat report the US Dollar rallied against its rivals and hit a fresh five-year high against the Yen.
The ‘Buck’ edged towards a two-week high against the Pound.
According to economists surveyed by Bloomberg News agency, the Federal Reserve can be expected to trim the level of asset purchases in steps of $10 billion Dollars over the course of seven FOMC meetings.
On Wednesday Bernanke commented; ‘If we’re making progress in terms of inflation and continued job gains then I imagine we’ll continue to do, probably at each meeting, a measured reduction [in asset purchases].’
Therefore, the first employment and inflation reports of the New Year will be of particular interest.
Should the situation appear to be improving more quickly than expected the Fed may consider a more dramatic reduction in easing.
US Dollar (USD) Current Exchange Rates
< Down > Up
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6105 <
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7322 >
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.1266 <
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 104.2300 >
The US Dollar/Canadian Dollar Exchange Rate is currently in the region of: 1.0686 >
The Pound Sterling/ US Dollar Exchange Rate is currently in the region of: 1.6370 >
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3687 >
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.8903 >
The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9364 <
The New Zealand Dollar/US Dollar Exchange Rate is currently in the region of: 0.8202 >
(Correct as of 16:30 GMT)
Comments are closed.