The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by around 0.55% on Friday morning.
After retail sales data printed poorly on Thursday, the Pound dived versus the majority of its most traded currency rivals. The declination was seen as overdone, however, with traders causing the Pound to gain on Friday despite a complete absence of domestic data. Additional appreciation can be linked to continued positive sentiment towards the Bank of England (BoE) after minutes from the most recent policy meeting hinted at a sooner-than-expected benchmark rate hike.
The US Dollar, meanwhile, dived versus the majority of its most traded currency competitors after labour market data printed disappointingly. A recent succession of disappointing data has led futures traders to pare bets as to the timing of a Federal Reserve cash rate increase.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5122.
Pound Sterling (GBP) Exchange Rate Gains on Overdone Declination
Although the forthcoming general election is weighing on investor confidence, not least because there is no clear majority for any party, the prospect of a massive policy overhaul has been priced-in to an extent. The Pound dived on Thursday after retail sales declined, but traders saw these losses as unjustified given they were fuelled by political uncertainty.
In addition to correcting overdone losses, the Pound strengthened on Friday as traders continue to show positive sentiment towards the BoE. Minutes from the most recent Monetary Policy Committee (MPC) meeting revealed that policymakers were positive with regards to the Eurozone’s economic recovery, and hinted that a rate hike was just around the corner.
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low of 1.5025 today.
US Dollar (USD) Exchange Rate Softens as Traders Pare Cash Rate Hike Bets
A run of particularly disappointing domestic data results has caused the US Dollar to soften considerably versus its major rivals. Thursday’s data compounded the depreciation after labour market figures failed to meet with median market forecast. The string of poor results has led futures traders to delay bets as to the timing of a benchmark rate increase.
‘If the Fed raises rates later this year, and it causes a re-evaluation of the projected path of monetary policy, then history could repeat with the 10-year Treasury yield shooting substantially higher,’ said LaVorgna and Ryan. ‘Monetary policy makers have told us that they anticipate a gradual normalization of interest rates, but the reality is that they do not know.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate
With US Durable Goods Orders data due for publication and the general election weighing on demand for the British asset, the Pound Sterling to US Dollar (GBP/USD) exchange rate could fluctuate over the course of Friday’s European session. Should the durables data print poorly, however, the US Dollar will almost certainly dive across the board.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is reached a high of 1.5146 today.
