GBP/USD Exchange Rate Falls as US FOMC Minutes Raise Rate Hike Hopes
The Pound US Dollar (GBP/USD) exchange rate is down today and currently trading around $1.3069 on the inter-bank market.
The US Dollar (USD) gained on Sterling (GBP) today following last night’s publication of the Federal Open Market Committee’s minutes, which were generally bullish and proposed a possible rate hike should the US economy improve.
A summary of the meeting stated mixed signals, however the possible hike has buoyed ‘Greenback’ traders’ confidence today. It said:
‘Several participants noted that their views of the appropriate range for the federal funds rate could shift in either direction… Some participants indicated that if the economy evolved as they currently expected… they would likely judge it appropriate to raise the target range for the federal funds rate modestly later this year.’
Many USD traders will be looking ahead to the publication of the US continuing jobless claims figures for March today, and with any signs of improvement this could see the US Dollar rise further.
Sterling, meanwhile, has fallen today following last night’s granting by the EU of a 6-month extension to Brexit, which allows Prime Minister Theresa May extra time to secure backing from Parliament on her withdrawal deal.
GBP/USD Exchange Rate Sinks as UK House Price Balance Figures Plummet
Today, meanwhile, saw the publication of the UK RICS housing price balance figures for March, which fell by -24%.
Steve Gadbsy, of the Gadsby Nichols estate agents, commented:
‘Brexit is still the main issue causing market uncertainty. This is particularly relevant to mid and higher priced properties where purchasers seem to be awaiting a Brexit outcome before commitment.’
Brexit concerns, however, have generally eclipsed economic data today, with concerns rising over the oncoming uncertainty as May must now face an increasingly divided Parliament.
May, once again, turned on MPs, saying:
‘Over the last three months I have voted three times to leave the European Union. If sufficient members of parliament had voted with me in January we would already be out of the European Union.’
GBP/USD Forecast: Sterling Could Struggle as May Wrestles with a Divided Parliament
US Dollar traders will be looking ahead to tomorrow’s release of the flash US Michigan Consumer Sentiment Index figures for April, which are expected to come in slightly lower than in March.
There are no significant UK economic data releases tomorrow, with many Sterling traders looking ahead to next week instead.
The GBP/USD exchange rate will remain sensitive to ongoing Brexit developments following the recent 6-month delay, and with any indications of a further divided Parliament this could further hinder developments for May to secure a majority for her withdrawal deal.