Prior to the release of the latest US Initial Jobless/Continuing Claims data, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5284, down 0.4% on the day’s opening levels.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Falls beyond 20-Day Low after UK GDP
Over the course of this week the Pound Sterling to US Dollar (GBP/USD) exchange rate steadily declined as demand for the Pound was impeded by a lack of notable UK data and the ‘Greenback’ rallied off the back of improved Federal Reserve interest rate hike expectations.
On Wednesday ‘Cable’ dropped to a 20-day low, and the pairing extended losses on Thursday after the UK published below-forecast growth data for the first quarter of the year.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a low of 1.5263
Economists had expected the UK’s quarterly GDP figure to be positively revised from an initial estimate of 0.3% to 0.4%, which would have pushed the annual number up from 2.4% to 2.5%.
However, while construction output was modestly stronger than anticipated, the services sector underwent a negative adjustment which hindered a more encouraging level of overall expansion.
The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.5386
The data pushed the Pound lower against a number of its peers, although some industry experts remain confident that the dip in output recorded over the first three months of the year will correct itself as 2015 progresses.
Economist Howard Archer noted; ‘Despite the marked slowdown in the first quarter, we remain largely upbeat about growth prospects for 2015 – especially now that the risk of prolonged political instability has been removed by the election of a majority Conservative government. We believe robust consumer spending could push GDP growth up to 0.7% quarter-on-quarter in the second quarter. Growth is seen holding up around this level through the second half of the year.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Euro Stronger Despite ECB Warnings
The Pound also dropped against the Euro, with the GBP/EUR pairing briefly hitting a low of 1.3978.
While Sterling slipped in response to the UK’s GDP report, the Euro rallied in reaction to encouraging German Producer Price and Eurozone Sentiment data.
The assurance of the Greek PM that the nation is close to reaching a bailout agreement with its creditors also bolstered the Euro, in spite of the European Central Bank (ECB) warning of the risk of contagion from a ‘Grexit’.
In its Financial Stability Review the ECB cautioned that a Greek default will negatively impact markets, but despite this sobering commentary the Euro continued trending higher.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: US Jobless Claims Higher than Expected, GDP Data to Cause ‘Cable’ Movement before the Weekend
The Pound Sterling to US Dollar (GBP/USD) exchange rate continued trending in a softer position on Thursday even as the US Initial Jobless/Continuing Claims numbers came in higher than projected.
The number of people applying for first time unemployment benefits came in at 282,000 in the week ending May 23rd rather than the 270,000 expected.
Continuing Claims also printed at 2222K rather than the 2200K projected.
However, as jobless claims remained below 300,000 for a 12th week, the US Dollar’s bullish attitude persisted after the figures were published.
Tomorrow the GBP/USD exchange rate could recoup some of its recent declines if US annualised first quarter growth is negatively adjusted from 0.2% to -0.9%.
Investors with an interest in the GBP/USD exchange rate will also be looking to the UK GfK Consumer Confidence Index for guidance.
The Pound Sterling to Euro (GBP/EUR) exchange rate is was trending in the region of 1.4020, the US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.9176, the Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0894, the Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5277
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