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Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Interest Rate Decisions Impact Currency Strength, ‘Buck’ Dominance Continues

US Dollar Currency Forecast

GBP/USD Exchange Rate Slumps as US GDP Prompts Upsurge for the US Dollar

Yesterday’s GDP report for the US saw increased demand for the ‘Greenback’ (USD) as economic growth was confirmed on the previous quarter, at 2.3% over 0.6%. While not quite up to the forecast 2.4% this positive data saw the GBP/USD exchange rate shedding value to drop to a daily low of 1.5566. However, the effect was not quite as drastic or lasting as might have been expected, leading the pairing to rebound overnight. Currently GBP/USD is trending lower in the range of 1.5567.

Earlier…

Although the Federal Open Market Committee (FOMC) elected to hold interest rates at its latest gathering, the potential for a rise before the end of the year kept the US Dollar (USD) robust against the Pound (GBP).

UK GDP Figures Rallied Pound as ‘Greenback’ Slipped on Consumer Confidence, GBP/USD Exchange Rate Rose to Fortnightly Peak

Tuesday proved a turbulent day for the Pound Sterling to US Dollar (GBP/USD) exchange rate as major data was released both sides of the Atlantic. On-target GDP figures for the UK, 0.7% for quarter-on-quarter and 2.6% for year-on-year, offered a strong rallying point for Sterling (GBP) and saw it rise across the board against rivals. In the immediate wake of the report the GBP/USD pairing rapidly surged from a daily low of 1.5532 to a new high of 1.5612.

The day also saw a significant blow struck to the previously bullish ‘Buck’ when US Consumer Confidence numbers were revealed to be far below forecast. With pundits having anticipated a marginal but healthy rise on the previous month’s figure of 99.8 the more dismal drop to 90.9 came as something of a surprise. Capitalising on the disappointment the GBP/USD pairing soon beat the day’s earlier peak to touch 1.5621.

US Dollar (USD) Less Bullish than Anticipated Today after FOMC Interest Rate Comments with GBP/USD Quick to Rally

As undoubtedly the most significant impactor on the value of the US Dollar this week, much activity was prompted in advance of last night’s rate decision by the Federal Open Market Committee (FOMC) as speculators positioned themselves.

Announcing that interest rates would be kept at their current level of 0.25%, FOMC chair Janet Yellen distinctly implied that the anticipated hike could be expected before the end of the year. However, the Fed’s comments remained noncommittal on an exact timescale which led to the result being deemed more dovish than hawkish, as investors start to become sceptical over the wisdom of an accelerated interest rate increase in the current economic climate.

In the wake of this the ‘Greenback’ did not succeed in boosting itself to quite the extent that had been expected, but while this dented the currency’s aggressive run it was not nearly severe enough to push it down significantly when so many of its rivals remain soft. Nevertheless, the GPB/USD exchange rate rallied to remain above a weekly low and slowly begin trending upwards once more on the continued bullishness of the Pound.

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: US GDP May Prompt ‘Greenback’ Gains as Pound Buoyancy Fades

While the UK has already released the bulk of its economic data for the week, the US awaits its own GDP reports later today. In the event of these figures hitting target, or even perhaps improving on it, the ‘Buck’ stands to experience a powerful rally. A positive showing now could well encourage a swifter interest rate hike from the FOMC, a prospect that may draw increased trade to the US Dollar and raise its value further against rivals.

Concerns of an oncoming currency crisis may deter some from driving the ‘Greenback’ up, however with the global slowdown continuing apace and heightening the appeal of safe-haven currencies it does not appear as if the US Dollar will be seeing any particular softening too soon.

Current GBP, USD Exchange Rates

Currently GBP/USD is trending narrowly at 1.5612, while USD/GBP remains in the range of 0.6405.