Positive Non-Manufacturing PMI Boosts US Dollar (USD) as Dovish Trading Erodes GBP/USD in Advance of Bank of England Decision Today
A strong showing on the US Non-Manufacturing PMI, rising to 60.3 over the forecast 56.2, helped bolster the ‘Greenback’ (USD) yesterday and push the GBP/USD exchange rate down to 1.5593. However, with today’s upcoming Bank of England (BoE) triple data release Sterling (GBP) began to rapidly regain ground overnight, as pundits hope to see confirmation of the Monetary Policy Committee (MPC) taking the first step of progress towards an interest rate hike. Cautious trading has nevertheless brought the GBP/USD pairing down a little this morning to trend at 1.5603.
Weak data for the US has allowed the Pound (GBP) to make gains in advance of tomorrow’s keenly anticipated Bank of England (BoE) Inflation Report and Rate Decision.
Personal Consumption Expenditure Rallied US Dollar (USD) as Pound (GBP) Oscillated on Positive House Prices and Weak Construction PMI
A better than predicted result for the US year-on-year Personal Consumption Expenditure index lent some strength to the ‘Greenback’ (USD) late on Monday, as it stayed consistent with the previous month’s increase of 1.3%. In spite of this demonstration of economic health, however, the Manufacturing PMI produced a severe let-down as it slid from 53.5 to 52.7 instead of holding steady as had been anticipated. This mixed bag of results for the US saw the GBP/USD spike to 1.5616, clawing back much of its losses from that morning.
Positive Nationwide House Price data, meanwhile, gave the Pound (GBP) another boost against rivals yesterday, before the disappointing Construction PMI result brought the currency back down in a day of particular fluctuation for the GBP/USD pairing.
Low Employment Change and Trade Deficit Today Suggest Weakening US Economy, GBP/USD Exchange Rate Boosted as ‘Greenback’ Falters
While seemingly another disappointment for Sterling, today’s UK Services PMI result has prompted further resurgence for the GBP/USD exchange rate. Clocking in at 57.4 as opposed to the more optimistically predicted 58, this was nevertheless good enough to mostly prop up the nation’s composite figure. Growth remains relatively strong in spite of shrinkage, and with less economic uncertainty in the upcoming month the fact that this figure could easily stand to right itself seems to be a thought at the forefront of trader’s minds.
Statements have emerged that suggest a Federal Open Market Committee (FOMC) rate rise might be in store for September, which consequently sent the ‘Greenback’ on to gain across the board. With the encouragement of hike expectations, pundits were quick to flock to the safe-haven currency. However, today’s lower-than-expected ADP Employment Change, 185 thousand rather than 213.7 thousand, and a deficit showing from the Balance of Trade have both put a dampener on that increased optimism. Consequently the GBP/USD exchange rate has jumped upwards to 1.5641.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Sterling Hopes to Consolidate Gains on Positive Bank of England Data
Also due out today, the US Non-Manufacturing PMI may provide a needed rally for the wounded ‘Buck’, with tomorrow’s Jobless Claims figures also offering potential for the currency to recover its footing. Similarly weak results, however, will only damage the US Dollar further, offering a more compelling suggestion that a FOMC rate hike will ultimately come later than September.
The biggest degree of movement is likely to be caused by the Bank of England (BoE) though, as the Rate Decision and Inflation Report are released tomorrow. Sterling’s recent gains could potentially be wiped out should indications suggest that Monetary Policy Committee (MPC) members are holding off on voting for an interest rate rise of their own, although the reserve will surely give added value to the GBP/USD pairing.
Current GBP, USD Exchange Rates
At present the GBP/USD exchange rate is trending up in the range of 1.5640, while USD/GBP is at 0.6397.