The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.14% on Friday morning.
After Bank of England (BoE) Governor Mark Carney made a dovish speech with regard to monetary policy outlook, the Pound slumped versus the majority of its most traded currency competitors. Carney hinted that he was in no rush to increase rates, and that hikes would be done gradually over the next three years.
The US Dollar, meanwhile, strengthened versus many of its major rivals on Friday after having declined significantly on Thursday. Speculation that the ‘Greenback’ (USD) was oversold is the main reason for the recovery.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4868.
Yesterday…
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by around 0.40% on Thursday morning.
British economic data produced positive results on Thursday, but the Pound is generally trending lower versus many of its major peers. This can be attributed to a stronger single currency and ongoing disappointment from Wednesday’s poor UK manufacturing print.
The US Dollar, meanwhile, softened versus nearly all of its most traded currency competitors in response to the Federal Reserve stress tests on Wall Street banks. The tests showed many institutions, including Bank of America (BofA), only just scraped a pass and look vulnerable should another financial crisis occur.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4996.
Pound Sterling (GBP) Exchange Rate Edges Lower as Euro Gains
After traders feared that the recent Euro declination was overdone, the shared currency recovered some of its losses on Thursday. This caused the British Pound to soften versus many of its major peers despite positive domestic data results.
Total Trade Balance eclipsed the median market forecast of a deficit of -£2300, with the actual result narrowing to only -£616. In addition, RICS House Price Balance registered a growth of 14%, well above the market consensus of 6%.
‘(The trade data) is another positive in the UK outperformance story,’ said Stephen Saywell, global head of FX strategy at BNP Paribas in London.
‘Like the US, the UK is likely to hike (interest rates) sooner rather than later, but there’s still a lot of uncertainty about the timing,’ Saywell added. ‘If the market brings forward that timing, Sterling continues to look pretty positive.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low of 1.4908 today.
US Dollar (USD) Exchange Rate Dives ahead of US Retail Data
A report from the Fed stress tests on Wall Street banks caused the ‘Greenback’ (USD) to soften versus many of its major peers on Thursday. The report indicated that many banks only scraped a pass, including BofA, and some failed to prove that they could withstand another financial crisis.
‘In the US, Bank of America earned a conditional pass for its capital plan, meaning it must re-submit an improved plan by the end of September. The Fed’s statement said Bank of America has to ‘address certain weaknesses in its capital planning processes’,’ stated Jonathan Marino writing for Business Insider.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate
With US Advance Retail Sales data due for publication later on Thursday afternoon, and with European geopolitical tensions causing Euro volatility, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to fluctuate over Thursday’s trade.
Friday ought to see heightened GBP/USD volatility with British construction data and US confidence data due for publication.
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced to a high of 1.5014 today.
