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Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: BoE Meeting Minutes, FOMC Rate Decision in Focus

Bank of England

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a narrow range in Wednesday’s session ahead of highly influential UK wage growth, Unemployment Rate and Employment Change stats, as well as the Bank of England (BoE) meeting minutes and Federal Reserve statements.

The UK’s labour market data is forecast to cause some major fluctuations in the Pound Sterling to US Dollar (GBP/USD) exchange rate as investors’ price in the possibility of a UK interest rate hike. Speaking of which, the Bank of England meeting minutes will be key for the Pound’s (GBP) strength today with the potential for a policymaker divergence on the cards.

Currency strategist Richard Falkenhall commented: ‘The labour numbers are important. We have got to see signs that wage pressure is improving in the UK [before interest rates can be hiked].’

Bank of England (BoE) Meeting Minutes, FOMC Announcement in Focus

In the past few meetings, two policymakers have suggested that their decision on the matter was ‘finely balanced’ and therefore it’s highly possible that a divergence could be seen today.

Additionally, the US Dollar (USD) exchange rate is in for a big day on Wednesday with the latest monetary policy announcement from the Federal Open Market Committee (FOMC). The US Federal Reserve is currently forecast to begin hiking interest rates in September and any hawkish comments from the central bank could cause a US Dollar to Pound Sterling (USD/GBP) exchange rate rally.

Analyst Angus Campbell commented: ‘An update to economic projections with a new dot chart should provide not only greater guidance as to whether we’ll see just one or two rate hikes this year and determine whether September is the favourite for the first one, but also give a better idea of when and where the end rate will be, currently expected to be above 3.00% by the end of 2017.’

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: US Inflation Ahead

The Pound Sterling to US Dollar (GBP/USD) exchange rate could be in for an interesting day on Thursday with the release of UK Retail Sales and US Consumer Price Index (CPI) figures. The US inflation data is likely to cause some major market ripples as investors will price in favourable inflation numbers as a step towards a Federal Reserve interest rate hike.

The US Dollar to Pound Sterling (USD/GBP) exchange rate is trending at 0.6389.

The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5657.