Although upbeat UK growth data boosted the Pound during European trading, the British asset was struggling to push above 1.66 against the US Dollar.
After UK GDP was shown to have expanded by 0.7 per cent in the fourth quarter of the year (following growth of 0.8 per cent in the third and rounding off the UK’s best year since 2007) the Pound posted widespread gains. Although it later trimmed its advance economists bet that the current climate will leave the Pound ‘generally supported for the time being’.
However, Sterling was able to extend gains against its US rival after a disappointing durable goods order for the world’s largest economy dampened speculation surrounding the Federal Reserve’s plans to taper stimulus in the near future.
US durable goods orders defied expectations for a monthly gain of 1.8 per cent in December by slumping 4.3 per cent, following a gain of 2.6 per cent in November which was smaller than forecast.
Durable goods excluding transportation fell by 1.6 per cent vs. expectations for a 0.6 per cent gain.
The result prompted this response from economist Stuart Hoffman; ‘Clearly this is a weak report to cap off what was kind of a weak year for business investment. We will see better business investment in 2014.’
Shortly after the less-than-impressive durable goods orders figures were released, consumer confidence figures for the world’s largest economy were published.
The gauge was expected to dip from the 78.1 recorded in December to 78.0 in January.
However, it actually jumped to 80.7 this month.
The result is a bright spot in the US outlook and could be enough to help the ‘Greenback’ recover losses before the close of local trading.
Tomorrow’s UK Nationwide house price report is unlikely to cause any notable movement in the GBP/USD pairing, but the highly anticipated Federal Open Market Committee announcement will certainly inspire notable movement.
If the patchy US data released in recent weeks prevents the Fed from tapering stimulus, the US Dollar could drop and emerging market currencies could rebound.
US Dollar (CAD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6024,
US Dollar,,Canadian Dollar,1.1150 ,
US Dollar,,Euro,0.7316,
US Dollar,,Australian Dollar,1.1369,
US Dollar,,New Zealand Dollar,1.2102 ,
Canadian Dollar,,US Dollar ,0.8998 ,
Pound Sterling,,US Dollar,1.6596 ,
Euro,,US Dollar,1.3663,
Australian Dollar,,US Dollar,0.8796,
New Zealand Dollar,,US Dollar,0.8282 ,
[/table]
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