Towards the end of Friday’s European session, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a narrow range. British government borrowing data produced better-than-expected results, and geopolitical tensions in Europe saw heightened demand for the safe-haven US Dollar.
With a distinct lack of influential British economic data over the coming week, the Pound is likely to see volatility as a result of fluctuations in the wider currency market. The Pound will strengthen, for example, if European data prints positively but the common currency remains weak amid speculation of a Greek exit from the Eurozone.
The US Dollar will see fluctuations on domestic data results with the Federal Open Market Committee (FOMC) stating that they continue to look at domestic ecostats to drive policy outlook.
Pound Sterling (GBP) Exchange Rate Forecast to Fluctuate on Market Volatility
As explained above, a distinct absence of influential domestic data publications over the coming week will see the Pound trading in response to movement from other currencies in the wider market.
Given the lack of data, the few publications on the UK’s economic docket may be more impactful than if the calendar was crammed with data. For those trading with the British asset; CBI Trends Total Orders, CBI Trends Selling Prices, BBA Loans for House Purchase and CBI Reported Sales will be of interest.
US Dollar (USD) Exchange Rate Forecast to Soften as traders Pare Federal Reserve Rate Hike Timing
With a succession of US economic data publications producing poor results, futures traders have been forced to delay bets as to the timing of a Fed rate increase. Should ecostats continue to throw out poor results over the coming week, the US is likely to soften considerably. Of particular importance will be Durable Goods Orders, which came in at -0.5% previously. Should Durables continue to decline, the US Dollar is likely to dive significantly. May’s Durable Goods Orders is expected to decline by -0.6%.
Any speeches from Federal Reserve officials will likely impact heavily on US Dollar demand. Should FOMC members continue to question the likelihood of a September liftoff, the US asset will soften. However, it is fair to say that if geopolitical tensions in Europe amplify, safe-haven demand will cause a US Dollar appreciation.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5833 – 1.5897 during Friday’s European session.