- GBP exchange rates advance on positive housing data
- Osborne’s ‘Brexit’ warnings limit Sterling appeal
- US Dollar cools after housing data missed estimates
- GBP/USD exchange rate forecast to hold gains after dovish Federal Reserve William Dudley speech
Pound Sterling (GBP) Exchange Rates Forecast to Tick Higher despite ‘Brexit’ Uncertainty
In the early stages of Monday’s European session the British Pound softened versus a number of its major peers following a speech from Chancellor George Osborne.
Osborne stated that findings from a Treasury analysis that a ‘Brexit’ would be damaging to the UK’s economy and have the greatest impact on the poorest in the country. Whilst this should have been a boost to the ‘in’ campaign, commentators have questioned whether Osborne’s unpopularity has been detrimental to the cause.
Critics have also pointed out that Osborne’s apparent concern for the poorest demographic is seen to be somewhat contradictory given that the government’s austerity measures have had the greatest impact on the poor.
However, as the session progressed the UK asset found support. This is most likely to be consolidative as traders fear overreaction to ‘Brexit’ uncertainty, especially with most expecting further losses as we draw closer to the June 23rd vote.
Positive domestic data also supported demand for the UK Pound after April’s Rightmove House Prices figures advanced to a record-high.
Miles Shipside, Rightmove director and housing market analyst, said; ‘While some felt that there would be a stampede of existing landlords selling to other landlords, these figures indicate that many of those who sold during the buy-to-let rush were actually first-time sellers looking to trade up. They used the heightened demand from investors competing fiercely with first-time buyers to springboard themselves onto the next rung of the housing ladder.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4272.
US Dollar (USD) Exchange Rates Struggle after Housing Data Misses Estimates
In response to disappointing domestic data, the US Dollar softened versus a number of its major rivals on Monday. April’s NAHB Housing Market Index was forecast to tick higher from 58 to 59, but the actual result held at 58.
Also weighing on demand for the US Dollar was a dovish speech from Federal Reserve New York President William Dudley. Whilst Dudley stated that the US economy is on the right track, he reiterated Chairwoman Janet Yellen’s stance that policy changes will be approached slowly and cautiously.
‘Policy adjustments are likely to be gradual and cautious, as we continue to face significant uncertainties and the headwinds to growth from the financial crisis have not fully abated,’ he said.
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.4129 during Monday’s European session.
GBP/USD Exchange Rate Forecast: Eurozone Economic Sentiment Survey to Provoke Volatility
With an absence of further British or North American data publications, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold gains for the remainder of Monday’s European session.
Tuesday could see GBP/USD volatility in response to the Eurozone ZEW Economic Sentiment Survey, which has the potential to generate significant movement for the Euro, which would weaken the US Dollar. This is because of negative correlation between the Euro and US Dollar.
US Housing Starts and Building Permits data may also impact on the GBP/USD exchange rate.
With a complete absence of British data on Tuesday, political developments and wider market movement will dictate GBP positioning.
The Pound Sterling to US Dollar (GBP/USD) exchange rate reached a high of 1.4282 during Monday’s European session.
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