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Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend Close to 1.55 on Mixed US Data

US Dollar Currency Forecast

The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a limited range on Thursday afternoon.

Despite the fact that British economic data printed disappointingly on Thursday, the Pound strengthened in the latter half of the European session. The appreciation is also in spite of the decision by Chancellor George Osborne to sell the government’s stake in the Royal Bank of Scotland (RBS) at a significant loss. The Pound uptrend is likely to be the result of speculation that the recent declination was overdone.

The US Dollar, meanwhile, edged higher versus many of its rivals after retail sales recovered from recent stunted growth. However, the appreciation was somewhat slowed after labour market data failed to meet with expectations. In addition, fears regarding Dollar overvaluation are weighing on demand for the ‘Greenback’ (USD).

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5502.

Pound Sterling (GBP) Exchange Rate Forecast to Trend within Limited Range against the ‘Greenback’ despite RBS Sale

After Chancellor Osborne signalled that the government would be selling its 80% stake in the Royal Bank of Scotland, the Pound dived. This is mostly due to the fact that shares will be sold for significantly less than the government originally paid. ‘By selling off the public stake in the Royal Bank of Scotland, George Osborne is short-changing the public and wasting a historic chance to bring needed change to Britain’s banks,’ Unite said, criticising the risk of selling the stake at a ‘knock-down rate to city investors.’

The UK’s solitary economic data publication failed to impress on Thursday. RICS House Price Balance came in at 34% in May; missing the median market forecast 36%. ‘It is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable,’ RICS chief economist Simon Rubinsohn said.

The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low of 1.5419 today.

US Dollar (USD) Exchange Rate Forecast to Hold Steady against Pound Sterling amid Overvaluation Concern

With several US officials, including US President Barak Obama, stating that the US Dollar is significantly overvalued; many futures traders predict that a long delayed benchmark rate increase would be met with a massive US Dollar surge. This is likely to be the most significant reason that the US Dollar is trending relatively statically despite comparatively positive domestic data results.

Advance Retail Sales met with May’s median market forecast of a 1.2% increase. However, Continuing Claims and Initial Jobless Claims both failed to meet with respective market consensuses. ‘The consumer took a month off and came back and spent in style,’ said Ward McCarthy, chief financial economist at Jefferies LLC in New York, who correctly forecast the increase in retail sales. ‘Consumers’ behaviour has been inconsistent, but the trend has been for gradual acceleration of spending.’

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Steady ahead of UK Construction Output

Given the absence of further domestic data publications to provoke changes, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to continue trending within a narrow range for the remainder of Thursday’s European session. Friday ought to see ‘Cable’ volatility with British Construction Output data due for publication. Later on Friday the University of Michigan Confidence report will also provoke changes for the pairing.

The Pound Sterling to US Dollar (GBP/USD) exchange rate climbed to a high of 1.5512 today.