The US Dollar (USD) strengthened broadly against all of its most traded peers on Thursday as positive employment cost data spurred traders to raise their bets for the Federal Reserve to raise interest rates.
Against the Pound (GBP) the US Dollar exchange rate advanced to its best level in almost two months to trade in the region of 0.592.
Against the Euro (EUR) the US Dollar advanced to a fresh eight month high of 0.747.
Stronger than forecast gross domestic product data showed that the US economy rebounded strongly in the second quarter of the year, durable goods orders have increased strongly and Thursday’s jobless claims data showed that over July claims fell to the lowest level since 2006.
According to the Washington based Labour Department showed that the four-week average of jobless claims dropped to 287,250, the lowest number recorded since April 2006.
On a weekly basis the number of claimants edged higher in the week ending July 26, in line with forecasts.
The ‘Greenback’ found further support after the claims data showed that the nation’s employment cost index climbed by 0.7% in the second quarter, a rise from the 0.3% rise recorded in the first three months of the year.
The rise beat economist expectations for an expected gain of 0.5%.
Also supporting the world’s largest economy are expectations that nonfarm payrolls data due for release on Friday will show that employers created more than 200,000 new jobs for sixth consecutive month.
The Euro weakened earlier in the session after official data showed that the regions annual rate of inflation slowed to a new five year low of 0.4% in July.
The report puts added pressure onto the European Central Bank to introduce new monetary easing measures at next week’s policy meeting in order to fight the threat of deflation in the Eurozone.
Sterling fell due to a lack of major data releases and as a report by Nationwide showed that UK house price inflation hit a 15-month low in July.
The fall suggests that the Bank of England’s (BoE) tighter lending measures are having an impact and seeing the house market cool.
GBP/USD Exchange Rate Forecast
The ‘Greenback’ is forecast to make further gains against the Pound and other peers on Friday if the latest US unemployment and nonfarm payrolls data come in strongly.
An improving labour market was one of the stipulations laid out by Federal Reserve Chair Janet Yellen for an interest rate hike.
Improved figures will add to the speculation that a rate increase could occur sooner than initially expected.
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,0.5929 ,
US Dollar,,Euro,0.7474 ,
US Dollar,,Canadian Dollar,1.0917 ,
US Dollar,,Australian Dollar,1.0767 ,
Pound Sterling,,US Dollar,1.6866 ,
Euro,,US Dollar,1.3381 ,
[/table]
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