The Pound Sterling to US Dollar (GBP/USD) exchange rate fell to a fresh 17-month low low after data out of the USA beat economist forecasts and as market attention looks ahead to the release of Federal Reserve policy meeting minutes.
In a report, payroll processing firm ADP said non-farm private employment rose by 241,000 last month, above expectations for an increase of 226,000. The economy created 227,000 jobs in November, whose figure was upwardly revised from a previously reported 208,000.
Earlier the Pound Sterling to US Dollar (GBP/USD) exchange rate is forecast to decline to a fresh 17-month low later on Wednesday as economists await the release of the latest US ADP Employment change figures and the publication of the minutes from the Federal Reserve’s December policy meeting.
Sterling fell further against the broadly supported ‘Greenback’ in the previous session as UK economic data showed that activity in the nation’s dominant services sector slowed to a 19-month low in December.
The softer than forecast data increased speculation that the Bank of England will choose to refrain from hiking interest rates anytime soon.
The US Dollar is also finding support from increased for safer assets as a number of issues spook market participants.
Tumbling oil prices, the uncertainty over the Eurozone and the slowdown of the Chinese economy have all combined to boost demand for the safe haven Dollar at the expense of riskier emerging market and commodity based currencies such as the South African Rand and Australian Dollar.
With oil prices falling below the $50 per barrel level for the first time since May 2009 concerns are building that prices are likely to fall even further as none of the major oil producers looks likely to back down on production levels. A glut in supply has been the driving factor for the price crash.
The Eurozone also continues to spook the markets as data released today showed that Italy’s unemployment rate increased more than forecast to a new high of 13.4% adding to signs that the embattled nation’s record long recession shows no sign of ending.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
If the latest Eurozone inflation data disappoints we can expect the US Dollar to make further gains against the Pound and particularly the Euro.
The USD/EUR exchange rate is already trading in the region of a 9-year high and a weak inflation report will increase speculation that the European Central Bank will have to introduce new monetary measures and perhaps a full-scale quantitative easing programme.
A lack of market moving UK data will see the Pound move because of events from Europe and the USA.
The Pound Sterling to US Dollar Exchange Rate is currently trading in the region of 1.512
