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Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Edge Higher ahead of US CPI

US Dollar Currency Forecast

The Pound Sterling to US Dollar (GBP/USD) exchange rate edged higher by around 0.16% on Friday morning.

After the shock removal of the minimum exchange rate cap from the Swiss National Bank, the currency market was turned on its head. With safe-haven currencies not feeling altogether stable anymore, investors are looking for fresh places to park their money. The Pound strengthened against nearly all of its major peers on Friday morning as the higher interest rate makes for a better investment.

The US Dollar also advanced thanks to demand for safe-haven assets. However, as traders await the crucial inflation data due for publication later on Friday, the US Dollar is generally holding steady.

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5203.

Yesterday…

The Pound Sterling to US Dollar (GBP/USD) exchange rate is softened by around -0.52% on Thursday afternoon. 

With the British general election drawing closer, the Pound slumped versus nearly all of its major peers. This is as a result of uncertainties regarding the UK’s place in the European Union with the UK Independence Party calling for an exit. In addition, should the Conservatives win, there will be a referendum on the UK’s exit from the EU.

The US Dollar, meanwhile, is generally trending lower versus many of its most traded rivals. This is due to traders fearing the currency’s recent surge was overdone and that the Federal Reserve will delay a rate increase. This was reinforced after US retail sales data for December failed to meet with expectations.

The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.9455.

Pound Sterling (GBP) Exchange Rate Softens ahead of UK Elections

General elections always cause volatility for a currency with the potential for changes to monetary policy, but the upcoming British election is of particular importance given that the UK’s position in Europe rests on the outcome. With opinion polls unable to identify a clear front-runner, demand for the British asset dampened considerably.

‘As we get closer to the election, volatility is likely to rise,’ Alvin Tan, foreign-exchange strategist said by phone. ‘The risk is there’ for political instability, he added.

‘The Conservatives’ problem is they don’t seem to be working, forcing Cameron to look for ways to strengthen his bid. His offer to bring forward an in-out referendum on Europe is a big step in that direction, but it risks being dismissed as impractical. Foreign Office negotiators could complain that rushing a vote risks failure in the delicate talks with European officials.’

The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low today of 1.5153.

US Dollar (USD) Exchange Rate Softer on Retail Sales

After retail sales data disappointed on Wednesday, the US Dollar ended a sustained bullish run. With the recent surge seemingly overdone amid speculation the Federal Reserve will raise rates in the near-future, the latest disappointing domestic data publication has fuelled the downtrend. ‘Maybe the optimism a month ago got a little too heated,’ said Guy Berger, US economist at RBS.

‘Macro challenges including lack of wage growth, persistent low labour force participation and rising housing and health insurance costs may continue to adversely impact low- and middle-income customers,’ Family Dollar Stores Chief Executive Officer Howard Levine stated. ‘When we look at the Family Dollar shopper, it is clear that she/he has continued to face economic headwinds even as the broader market has experienced a recovery.’

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate

With US labour market data due for publication later on Thursday afternoon, there is heightened potential for Dollar volatility. Therefore, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to fluctuate on Thursday.

The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced to a high today of 1.5246.