GBP/USD Conversion Rate Predicted to Strengthen after December’s UK House Prices Contract on the Month
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.6% on Monday afternoon.
Although December’s Rightmove House Prices showed the value of UK homes rose 7.4% compared with the previous year, the monthly reading showed -1.1% contraction. Whilst house prices remain comparatively high, the second successive monthly contraction in prices caused some traders to speculate that the boom has peaked. If this turns out to be a realistic forecast the Bank of England (BoE) would feel less pressure to make lending conditions tighter. However, many industry experts still envisage UK house prices climbing in 2016.
The Pound also softened in response to a warning from International Monetary Fund (IMF) chief Christine Lagarde who voiced concerns regarding the potential negative ramifications of a British exit from the Eurozone. This was swiftly followed by comments from Standard & Poor’s who said that they would downgrade the status of UK government debt forecasts from ‘stable’ to ‘negative’ in the event of a British exit from the EU.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5133.
USD/GBP Exchange Rate Forecast to Hold Gains as Fed Rate Hike Looms
As traders await Wednesday’s Federal Reserve interest rate decision, in which over 70% of economists believe that the Federal Open Market Committee (FOMC) will opt to hike the benchmark interest rate, the US Dollar is holding a position of strength versus most of its currency rivals. Gains have been somewhat limited, however, thanks to Euro strength. Now that so many traders predict that the Fed will lift-off on Wednesday, market focus has shifted to predicting how aggressively the FOMC will tighten policy.
‘The Fed is destabilising asset markets again. This time it is not because they are wrongfooting markets, but precisely because they have been doing their best to make the dovish lift-off a non-event,’ says Citigroup analyst Steven Englander. The Fed ‘can’t win.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.5105 during Monday’s European session.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK and US Inflation Data to Provoke Volatility
Tomorrow’s packed economic docket should cause heightened market volatility with several influential publications due. For those invested in the Pound, November’s inflation data will be of significance. The Bank of England (BoE) has repeatedly cited the absence of price pressures as the most significant reason for keeping monetary policy accommodative for longer.
In addition to British inflation data, November’s US consumer price data should provoke market movement. A positive reading from US inflation data will contribute to FOMC positivity when deciding on how aggressive to be in relation to tightening monetary policy.
The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.5205 today.
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