The GBP USD exchange rate has gradually risen this morning following some turbulence between the currencies yesterday, but has still struggled to make any notable gains for the week.
Pound (GBP) US Dollar (USD) Hindered by Weak Market Sentiment
The Pound (GBP) continues to struggle against the US Dollar (USD) as ‘Brexit’ uncertainties weigh on Sterling sentiment.
The Pound’s momentum last week appears to already be coming to an end as investors continue to worry about the how the effects of higher inflation and a weak Pound will impact British businesses. Following on from Microsoft’s price rise revelations on Monday, British model train maker Hornby has now announced that it will have to raise prices by an average of 10% to cover rising costs.
This will not help to alleviate market anxiety surrounding ‘Brexit’ as traders fear the potential for the UK to lose access to the single market when it splits from the EU, which could see businesses forced to raise prices even further to counteract tariffs placed on goods from the continent.
US Dollar Rebuffs Advances from Pound as Fed Bets Rise
The Pound US Dollar (GBP USD) is also coming under increasing pressure as bets on a December rate hike from the Federal Reserve steadily rise.
Markit released its US manufacturing PMI for October which unexpectedly grew to 53.2, beating predictions that it would remain at 51.5, helping to strengthen the ‘Greenback’ further against Sterling.
The US Dollar was unable to pressure the Pound too much however as Fed bets were dampened slightly by comments from Federal Reserve Bank of St. Louis President James Bullard who said that ‘low interest rates are likely to continue to be the norm for the next two or three years’ and that he only anticipates a single rate hike until the end of 2019.
GBP USD Exchange Rate Forecast: Pound to Face Volatility as Carney Speaks Later Today
GBP USD exchange rate movement is likely to occur when Bank of England Governor Mark Carney faces a House of Lords economic committee meeting later today. Carney will be grilled over the economic consequences of ‘Brexit’, which is expected to cause increased volatility in the Pound.
Meanwhile GBP USD may slide later if the US consumer confidence report is able to beat expectations that it will drop to 101 for the month of October.
Current Interbank Exchange Rates
At the time of writing the GBP/USD exchange rate was trending around 1.22 and the USD/GBP exchange rate was trending around 0.81.
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