The US Dollar has made gains against the Pound and all-of-its most traded peers due to increased speculation that the Federal Reserve will reiterate its plans to reduce the pace of its quantitative easing programme when its policy meeting ends.
A number of US data release added support to the ‘Greenback’ on Wednesday. Biggest amongst them was the latest US GDP data which showed that the nation’s economy improved in the second quarter of the year.
According to the Washington based Commerce Department GDP expanded by 1.7% in the second quarter, a further improvement to the 1.1% gain recorded in the first quarter. The US jobs market also saw support as data showed that companies in the states boosted payrolls in July by the biggest margin recorded so far this year. Employment increased by 200,000 beating economist expectations of a rise of 180,000.
As a result optimism of further increases later in the year has improved.
The government revised the figures to include new measures it says better capture the U.S. economy. For example, for the first time the Commerce Department released data on intangible assets like research and development, and entertainment and the arts. In the second quarter, the categories contributed to GDP.
Consumer spending accounts for about 70% of US GDP. Official figures showed that consumers spent less in the second quarter than in the first, with personal consumption expenditure up 1.8%, compared with 2.3% previously.
“The focus is now on the second half of the year. Most expect the pace of activity to pick up over the final six months of 2013, though the magnitude of the acceleration is highly debated,” Royal Bank of Scotland economists said ahead of Wednesday’s releases.
The outcome of the Federal Reserve’s two-day long policy meeting will be known later (around 7 pm GMT). Investors will be looking closely to see whether the Fed will choose to taper its monetary easing programme. The GDP data should see those policy makers reassess the state of the US economy.
Current US Dollar (USD) Exchange Rates
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6573
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7526
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.1067
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.7683
The US Dollar/Canadian Dollar Exchange Rate is currently in the region of: 1.0296
(Correct as of 15:00 pm GMT)