The Pound (GBP) to US Dollar (USD) Exchange Rate advanced to a one-week high on Monday as positive UK economic sentiment send Sterling higher against a number of major peers and as traders lowered their expectations that the Federal Reserve will raise interest rates anytime soon.
Concerns over slowing global economic growth have led to traders lowering their bets that the Fed will vote in favour of raising interest rates.
Lower inflation is also weighing upon the likelihood of a rate rise occurring until the second half of 2015.
Worries that the global economy is slowing were heightened after Germany’s Bundesbank revealed that the nation’s economy (which is the Eurozone’s largest) barely grew in the third quarter of the year as industrial production slowed and business sentiment declined sharply.
The weakness of the Eurozone is the main driver for concerns over the global economy.
The US Dollar found some support earlier in the session after Federal Reserve President of Dallas Richard Fisher said that the recent volatility in the markets should not be enough to prevent the Fed from ending its monthly bond-buying programme nor delay raising interest rates,
‘It hasn’t changed my outlook one iota. The underlying economy is doing well,’ Fisher said in an interview with CNBC news.
The comments were not enough to give long-term support to the ‘Greenback’ as a number of Fed presidents have offered their opinions on what Fed President Janet Yellen should do regarding rate hikes.
‘Ahead of the next Fed meeting, the various Fed speakers are all staking their ground publicly. The environment remains cautious but, statistically speaking, the odds of another big increase in risk aversion seem pretty low,’ said the chief currency strategist at Westpac Banking Corp.
The Pound was firmer against a number of peers as economists forecast that data due for release on Friday will show that the UK economy expanded for a seventh consecutive quarter and as data offered support.
According to Rightmove Plc, house prices across the UK increased by 2.6% in October from the previous month, taking the yearly increase so far up to 7.6%. A separate report measuring consumer confidence also supported as it showed that confidence increased to a three-year high in the third quarter of the year.
Pound Sterling to US Dollar Exchange Rate Forecast
The GBP/USD exchange rate is forecast to experience volatility as the week progresses as Thursday’s release of the Bank of England’s latest policy meeting minutes are expected to show that BoE policy makers will delay rates until later in the year.
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,0.6200 ,
US Dollar,,Euro,0.7829 ,
US Dollar,,Canadian Dollar,1.1275 ,
US Dollar,,Australian Dollar,1.1380 ,
Pound Sterling,,US Dollar,1.6127 ,
Euro,,US Dollar,1.2773,
[/table]
