On Thursday a lack of really influential UK and US developments left the Pound to US Dollar exchange rate (GBP/USD) trading in a fairly narrow range.
The Bank of England opted to leave interest rates unaltered and policy unchanged at May’s meeting.
The decision was expected by economists and had little impact on Sterling.
As no statement was issued, economists are still envisaging an interest rate increase in the first quarter of 2015.
Yesterday the US Dollar softened against its peers in response to Fed Chairwoman Janet Yellen’s dovish testimony.
Yellen reiterated that interest rates would need to remain at record lows for the foreseeable future and highlighted ongoing weaknesses in the US economy.
The safe-haven US Dollar also softened as risk appetite returned to the market thanks to an easing in Ukraine tensions.
While the ‘Greenback’ held steady against the majority of its rivals on Thursday, the currency received some support from the news that US jobless claims declined by more than expected in the week ending May 3rd.
Claims fell to 319,000 from 345,000 the previous week.
Economists had anticipated a reading of 325,000.
Last week’s US non-farm payrolls report smashed expectations and this data also supports the argument that the US labour market is improving.
That being said, the less-volatile four-week moving average of claims advanced from 320,250 to 324,750.
Economist Jacob Oubina said this of the result; ‘Claims are drifting lower on a longer-trend basis. I think hiring will creep slightly higher.’
The GBP to USD pairing was little changed after the report was published.
While the US Dollar initially declined against the Euro after the European Central Bank rate decision, it recouped losses thanks to ECB President Mario Draghi issuing a cautious statement to the press.
Like the BoE, the ECB chose to leave policy and rates unchanged.
We might be dreaming of the weekend already, but the GBP/USD pairing could experience notable movement before then.
A stream of influential UK reports are due for release tomorrow, including UK trade balance figures, industrial/manufacturing production data and a domestic construction output report.
Given the upbeat outlooks many financial institutions have ascribed UK growth, the nation’s NIESR Gross Domestic Product estimate for April is also worth noting.
Pound to US Dollar Update at 11.20 GMT on 09/05/14
The GBP to USD Exchange Rate softened on Friday after a string of positive UK data reports caused investors to embark on a round of profit taking.
Better than forecast industrial and manufacturing production data combined with expectations that this afternoons NIESR GDP forecast will come in strongly.
A report showed that factory output in the first quarter of 2014 grew by 1.4%, the best quarterly figure seen since 1999 and far better than economist best projections.
Manufacturing however remains under its 2008 peak.
Construction output rose by 0.6% in the first quarter.
Comments by the director of NIESR added further support to the Pound and encouraged investors to take profits.
“The British economy is very close to being bigger than it has ever been. Symbolically, that matters, and it comes out a time when growth is entrenched,” said Jonathan Portes on the BBC Radio 4 Today programme.
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,0.5898,
US Dollar,,Canadian Dollar,1.0859,
US Dollar,,Euro,0.7188,
US Dollar,,Australian Dollar,1.0652,
US Dollar,,New Zealand Dollar,1.1569,
Canadian Dollar,,US Dollar ,0.9209,
Pound Sterling,,US Dollar,1.6953,
Euro,,US Dollar,1.3856,
Australian Dollar,,US Dollar,0.9388,
New Zealand Dollar,,US Dollar,0.8639,
[/table]
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