The GBP to USD exchange rate is currently trending in the region of 1.6729, moving between a low of 1.6712 and a high of 1.6738. Movement at this time is around 0.25% which is likely to be a result of the recent revision to second quarter UK Gross Domestic Product (GDP) results.
Last week was appalling for the Pound. Better-than-forecast unemployment was completely overshadowed by a drop in average wage growth. The lack of correlation between wage and unemployment led to an almost instantaneous negative trader reaction, and saw Sterling file losses across the board.
The mounting problems for Sterling grew ever higher following a dovish Bank of England (BoE) inflation report in which monetary policy and the interest rate remained unchanged. With a shift in focus from unemployment to wages; the hopeful speculations of a pre-2015 interest rate hike were dashed as a result.
Conversely US domestic data was, on the whole, positive last week. Perhaps the most significant of these, in terms of positive ‘Greenback’ (USD) movement, was manufacturing production which hit 1%; a considerable leap from the forecast figure of 0.4%.
The Pound Sterling to US Dollar exchange rate has hit a high today of 1.6738.
An Office for National Statistics (ONS) revision to the second quarter UK GDP has meant a UK economic growth of 0.2% from its pre-crisis peak. This has strengthened the Pound against many of its peers, including the US Dollar.
Perhaps most influential, in terms of positive Sterling movement, was a Sunday Times interview today with Bank of England governor Mark Carney. In the interview Carney suggests that the BoE will not necessarily wait for wage growth before raising interest rates stating; ‘We have to have the confidence that real wages are going to be growing sustainably [before rates go up]. We don’t have to wait for the fact of that turn to do so.’ This has given more substance to the dwindling hope of an interest rate hike before the close of the year.
Today has been relatively steady for the ‘Greenback’ ahead of tomorrow’s heaped domestic data docket. The only US domestic data release today has seen a positive result. The NAHB Housing Market Index was forecast to remain at 53, but the actual result has seen a rise to 55. This could weaken the Pound to US Dollar exchange rate later today given the lack of influential UK data.
GBP to USD Forecast
Tomorrow will be heavy, in terms of domestic data releases, for both the UK and US economies with a high likelihood of movement for their respective currencies.
Year-on-year UK Consumer Price Index is a significant market mover. It is forecast to dip slightly from 1.9% to 1.8%.
The UK Retail Price Index will also have an influential weighting. A fractional fall is forecast from 256.3 to 256.2.
UK Consumer Price Index and Core Consumer Index reports will also be worth a watch, although a positive result would fail to have an impact if the data described above turns out negative results.
In terms of US domestic data the year-on-year Consumer Price Index will be of significance. It is forecast to drop from 2.1% to 2.0%. Also the Building Permits, Consumer Price Index and Housing Starts will all be ones to watch.
Wednesday will see the publication of the Bank of England Minutes pertaining to the Monetary Policy Committee. These particular minutes are generally considered to be of less importance than they usually would be because the report was a continuation of the current monetary policy, rather than a change.
The Federal Reserve is also publishing minutes on Wednesday. The Minutes from July 29-30 FOMC Meeting is likely to be of more significance than the BoE minutes.
Thursday will see another steeped data docket for both the UK and the US.
Year-on-year UK Retail Sales is likely to spark Sterling movement. It is forecast to drop to 3.1% from 3.6%. Public Finances and Public Sector Net Borrowing may also be of interest to those backing the Pound.
Thursday’s US domestic data will see several influential publications. Continuing Claims, Initial Jobless Claims, Manufacturing PMI, Existing Home Sales, Leading Indicators and Philadelphia Fed are all likely to determine ‘Greenback’ movement.
The Pound Sterling to US Dollar exchange rate has hit a low today of 1.6712.
GBP to USD Softens Moderately after UK Data Disappoints
The Pound to US Dollar exchange rate is currently trending in the region of 1.6644. The marginal decline is likely to be a result of this morning’s domestic data pertaining to UK Consumer Price Index and Retail Price Index.
UK Consumer Price Index was seen to have fallen from 1.9% to 1.6% despite having been forecast to drop to 1.8%. Also the Retail Price Index has fallen from 256.3 to 256.0. At present the Pound has seen little difference in terms of the impact of these results, but the likelihood that the downward trend is to continue has been increased substantially.
US domestic data due later today is sure to make an impression on the Pound to US Dollar exchange rate. In particular, the year-on-year Consumer Price Index could spark movement.
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