The Pound to US Dollar (GBP/USD) exchange rate fell to a 1-year low on Wednesday morning after UK economic data increased concerns that the nation’s economy is slowing.
According to the Markit compiled Services Purchasing Managers Index (PMI), activity in the UK’s dominant service sector slowed to a 17-month low in October as demand for goods eased and prices softened.
The PMI fell to a reading of 56.2, the lowest recorded since May 2013, from the preceding month’s number of 58.7. Economists had been forecasting for activity in the sector to have eased only slightly to a reading of 58.5. After the data was released, the Pound continued its declines against the US Dollar and softened against the Euro.
With all of the weeks PMI reports showing a slowdown, investors are increasing their bets that Bank of England policy makers will increase their resistance to raising interest rates from the current record low of 0.5%.
‘A sharp easing of service sector growth to the weakest since May of last year comes on the heels of data showing construction growth sliding to a five-month low and the goods-producing sector shifting down a gear since earlier in the year. After GDP growth slowed to 0.7% in the third quarter, a 0.5% expansion is currently being signalled by the surveys for the fourth quarter. However, with inflows of work rising across all three sectors at the slowest rate for 16 months, there is a risk that economic growth could weaken further,’ said Markit’s chief economist Chris Williamson.
Pound Sterling to US Dollar Exchange Rate Forecast to Fall Further
Sterling is expected to make further declines against the US Dollar as the session progresses.
Market attention will now shift to the afternoons US data releases, key of which will be the latest ADP Employment Change report.
A strong figure from that and we could see the US Dollar advance beyond a one-month high.
Pound Sterling to US Dollar Exchange Rate Forecast: GBP regains Ground against USD
The Pound eased its losses late in Wednesday’s session after the US Dollar was softened by a bout of profit taking and the release of an ISM non-manufacturing report which showed that economic activity in the worlds largest economy slowed in October. The non-manufacturing purchasing manager’s index fell to 57.1 last month from a reading of 58.6 in September.
The Non-Manufacturing Business Activity Index decreased to 60.0, which is 2.9 points lower than the September reading of 62.9.
Analysts had expected the index to inch down to 58.0 in October its lowest figure for 4-months. The soft data slowed the ‘Greenbacks’ earlier advances gained by a better than forecast ADP jobs report.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Firms on Profit Taking
The Pound inched higher against the US Dollar on Thursday as investors embarked on a bout of profit taking following the strong ADP jobs report released on Wednesday. The gains made by Sterling are likely to be short lived as the latest manufacturing and industrial production is widely forecast to come in weaker than the preceding month. Attention is also shifting to the Bank of England policy meeting outcome and expectations are high that the recent run of soft data will firm policy makers resolve to leave interest rates unchanged at the record low level of 0.5%.
The US Dollar meanwhile is likely to make further gains later in the session as the latest Non-farm payrolls data is likely to support the view that the US jobs market is performing well.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to make Weekly Decline
The Pound to US Dollar Exchange Rate is forecast to fall beyond its lowest level in 13 months and make another weekly decline as investors raised their bets that Friday afternoons eagerly anticipated US non-farm payrolls data will come in strongly. The USA’s unemployment rate is also forecast to show an improvement. Sterling meanwhile is likely to come under pressure from trade balance data. Economists are expecting the UK’s trade deficit to widen from -£1.9 billion to -£2.5 billion. After the Bank of England’s decision to leave policy unchanged surprised few, lackluster indicators have many investors pushing back expectations as to when the Bank of England may begin hiking benchmark interest rates.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Struggling at 14-Month Low
The Pound remained trading at a 14-month low against the US Dollar as UK trade data disappointed. Comments made by Bank of England Governor Mark Carney delivered a speech in which he hinted that Central Banks should leave policy unchanged. Sterling was unable to recover losses despite the release of weaker than forecast US Non-farm payrolls data.
The Department of Labor said the U.S. economy added 214,000 jobs last month, disappointing expectations for an increase of 231,000. The number of jobs added in September was revised to 256,000 from a previously estimated 248,000. Despite coming in below expectations the overall unemployment rate fell from 5.9% to 5.8%.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6314 ,
US Dollar,,Euro,0.8048,
US Dollar,,Canadian Dollar,1.1347 ,
US Dollar,,Australian Dollar,1.1608 ,
Pound Sterling,,US Dollar,1.5835 ,
Euro,,US Dollar,1.2422 ,
[/table]
