The Pound Sterling to US Dollar (GBP/USD) exchange rate softened on Friday as investor attention turns to the release of upcoming US economic data releases.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a session low of 1.538
Data released earlier in the week had put the ‘Greenback’ under pressure as it showed that the number of American filing for unemployment benefits rose more than expected. The report released by the Washington based Department of Labour showed that the number of benefit claimants increased by 31,000 to 313,000 last week, a rise from the preceding weeks total of 282,000.
Inflation data released on Thursday however offered the US currency some support as it showed that price pressures rose in some areas of the American economy could lend some support to an interest rate rise by the Federal Reserve.
Durable goods orders published by the US Commerce Department rose strongly by 2.8% last month, beating economist expectations for a rise of 1.7%, while core durable goods orders, excluding volatile items which inched up 0.3% in January.
The Pound Sterling meanwhile received little support from the release of UK data, which showed that the nation’s Gross Domestic Product (GDP) expanded by 0.5% in the final three months of the year, a figure that was unchanged from the initial estimate made by economists and was in line with expectations.
On an annual basis the UK economy expanded by 2.7% in the final quarter of 2014, again unchanged from a preliminary reading. The UK economy expanded at an annualised rate of 2.6% in the third quarter of 2014.
UK Election Jitters Soften Sterling
On Friday, the Pound softened against a number of peers due to political uncertainty. A new poll suggests that the Conservative Party led by David Cameron was likely to win the most parliamentary seats but would struggle to form a coalition government due to the expected collapse of support for the Liberal Democrats.
The uncertainty of the election outcome is set to weigh on the Pound further as the May election draws ever closer.
Pound Sterling to US Dollar Exchange Rate Forecast
The Pound could soften further later in the session if upcoming US economic data shows that the world’s largest economy expanded at a faster pace than forecast. Also due for release will be reports on pending homes sales and business activity in the Chicago region and consumer sentiment.