A fresh week of trading got off to a very quiet start due to a lack of significant global economic data releases. However, the Pound to US Dollar (GBP/USD) exchange rate was holding its own on Monday as investors focused on upcoming UK employment data.
Sterling was still shy of the 1.6996 US Dollar level it achieved last week, but the British currency was able to advance on the ‘Greenback’ over the course of European trading.
While US Dollar fluctuations were stilted the Pound was supported by positive UK news.
Firstly, the Lloyds employment confidence index advanced from -2 to 1 in April.
Secondly, the Confederation of British Industry hiked its growth forecast for the UK.
The Pound was also moderately stronger against the Euro.
According to CBI Director General John Cridland; ‘The recovery is advancing after a strong performance in the first quarter of 2014. Prospects are bright and we expect the recovery to broaden out this year, with greater support from business investment in particular. […] I think we will see the sort of investment that will achieve organic productivity growth by boosting the productive capacity of workers through new kit, new technology, and new work organization.’
CBI upgraded its growth projection for the UK from 2.6 per cent to 3 per cent.
This upbeat news helped to offset the adverse impact of Ukraine-inspired risk aversion.
The top business lobby also positively revised its expectations for 2015 to expansion of 2.7 per cent.
The CBI had previously envisaged growth of 2.5 per cent next year.
Business investment growth of 8.3 per cent is predicted for this year.
During North American trading a lack of US news left the GBP/USD pairing trade in a fairly narrow range.
Later today the publication of the US monthly budget statement could impact the US Dollar’s exchange rate, but investors will also be looking ahead to tomorrow’s advance US retail sales data.
Sales are expected to have risen by 0.4 per cent last month following an upwardly revised surge of 1.2 per cent in March.
Although a positive sales figure could boost the US Dollar against the Pound, gains could prove short lived if Wednesday’s UK employment figures show the improvement anticipated.
Economists have forecast that the UK unemployment rate edged from 6.9 per cent to 6.8 per cent in the three months to March.
The release of the Bank of England’s inflation report (also on Wednesday) is the week’s other notable piece of UK news.
Pound to US Dollar Updated on 13/05/2014
On Tuesday the Pound’s upward momentum stalled and the GBP to USD pairing lost ground.
Sterling also posted small losses against several of its other major currency counterparts prior to the release of UK employment data and the Bank of England’s quarterly inflation report.
The GBP/EUR pairing even struggled to advance after a measure of German economic sentient declined for a fifth month.
In the opinion of currency strategist Jeremy Stretch; ‘It may be the case that Sterling’s run is having a pause for thought. The burden of proof to provide a positive surprise from a Sterling perspective gets ever higher. It may have to wait for Mr Carney, but one could argue that is already priced in.’
The Pound received little support from data compiled by the British Retail Consortium detailing a 4.2 per cent year-on-year surge in like for like sales.
A 1.6 per cent annual increase had been expected.
Before the close of local trading the Pound to US Dollar exchange rate could weaken further if US retail sales figures surprise to the upside.
Currently investors are anticipating that US retail sales increased by 0.4 per cent in April following a monthly gain of 1.2 per cent in March.
A better-than-forecast result could see the ‘Greenback’ rally.
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,0.5939,
US Dollar,,Canadian Dollar,1.0900,
US Dollar,,Euro,0.7273,
US Dollar,,Australian Dollar,1.0704,
US Dollar,,New Zealand Dollar,1.1595,
Canadian Dollar,,US Dollar ,0.9173,
Pound Sterling,,US Dollar,1.6834,
Euro,,US Dollar,1.3718,
Australian Dollar,,US Dollar,0.9342,
New Zealand Dollar,,US Dollar,0.8629,
[/table]
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