The US Dollar to Pound (USD/GBP) exchange rate put on a mixed performance on Thursday as Sterling managed to push higher in spite of positive US reports.
After almost a week of bearish behaviour, Sterling was able to record gains against most of its rivals thanks to some hawkish remarks from one prominent Bank of England official.
Martin Weale is one of the two members of the Monetary Policy Committee who voted for an immediate interest rate increase at the August and September gatherings.
In light of the International Monetary Fund’s recent warnings about the global economic outlook and a spate of disappointing UK data, Weale would be forgiven for taking a dovish turn.
However, the policymaker remains as hawkish as ever and used a recent speech in Hull to stress that long-term price pressures make a sooner-rather-than-later interest rate increase essential for the UK’s continued economic growth.
His comments helped the Pound advance and the USD/GBP exchange rate failed to benefit from impressive US reports to the extent it otherwise would have.
The US Dollar to Pound Exchange Rate achieved a high of 0.6274
US data showed that industrial production surged last month, climbing by 1% instead of the 0.4% anticipated. Manufacturing production was up 0.5% on the month, also beating forecasts.
According to economist Ward McCarthy; ‘The fact that we can get a 1% increase in production when you have a decline in the auto sector is striking. There’s broad-based strength. Industrial production is solid.’
Separate US figures showed that the number of people applying for initial jobless claims in the week ending October 11 declined by more than expected, falling from 287,000 to 264,000.
Continuing claims weren’t quite as positive, rising from 2382,000 to 2389,000 instead of declining as forecast.
Meanwhile, the US Dollar to Euro (USD/EUR) exchange rate gained as the Euro plummeted across the board.
The US Dollar to Euro exchange rate achieved a high of 0.7872
The Euro was trending lower against peers like the Pound and Euro following the publication of the Eurozone’s Consumer Price Index and trade balance figures.
The region’s final CPI showed that consumer prices increased at an annual pace of just 0.3% in September, although core CPI was revised from 0.7% to 0.8%.
The Eurozone’s non seasonally-adjusted trade surplus was also a disappointment. A 4% drop in imports and a 3% slide in exports saw the surplus narrow from a revised 21.6 billion Euros in July to 9.2 billion Euros in August.
On a seasonally adjusted basis, the surplus widened by more-than-forecast.
However, the Euro’s over 0.5% drop against the US Dollar was largely due to a sharp slide in the Eurozone’s periphery bonds.
As stated by strategist Michael Woolfolk; ‘It’s not helpful that there’s renewed pressure on peripheral sovereign bonds. Much of it comes amidst heighted risk aversion. The Euro is set to weaken as the European economy falls further behind the US.’
US Dollar to Pound, Euro (USD/GBP/EUR) Exchange Rate Forecast
Before the weekend further US Dollar to Pound and US Dollar to Euro exchange rate movement could be occasioned by US building permits figures, the nation’s housing starts report and the University of Michigan Confidence Index for October.
The sentiment measure is expected to have eased from 84.6 to 84.1. A surprising result could inspire US Dollar volatility.
The USD/EUR pairing may also be affected by the Eurozone’s construction output report.
UPDATE
The US Dollar to Pound Sterling exchange rate is currently trending in the region of 0.6210.
The US Dollar to Euro exchange rate is currently trending in the region of 0.78000.
In the aftermath of some particularly dovish comments from the Federal Reserve Bank of St. Louis President James Bullard, the US Dollar has softened against the majority of its most traded currency peers. Bullard suggested that the Fed should continue its bond-buying program beyond October to keep its policy options open. ‘It would keep the program alive,’ and the Fed’s options ‘open as to what we want to do going forward,’ Mr. Bullard said during an interview on Bloomberg TV.
The Pound has softened fractionally in the wake of a speech given by Bank of England Chief Economist Andy Haldane after he argued that the BoE weren’t ready to hike rates for some time.
The single currency has also slumped on Friday amid renewed anxieties over the possibility of a Eurozone recession.
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,0.6244,
US Dollar,,Canadian Dollar,1.1326,
US Dollar,,Euro,0.7838,
US Dollar,,Australian Dollar,1.1473,
US Dollar,,New Zealand Dollar,1.2631,
Canadian Dollar,,US Dollar ,0.8828,
Pound Sterling,,US Dollar,1.6015,
Euro,,US Dollar,1.2660,
Australian Dollar,,US Dollar,0.8713,
New Zealand Dollar,,US Dollar,0.7907,
[/table]
