The US Dollar to Pound Sterling (USD/GBP) exchange rate softened by around -0.25% on Thursday afternoon.
Despite the fact that US labour market data produced positive results, the ‘Greenback’ (USD) has struggled to notch up any significant gains. The weakened US Dollar was initiated by a string of disappointing domestic data results released over the course of the week. Also weighing on demand for the US asset were dovish comments by Federal Reserve policymaker Lael Brainard who doesn’t see an economic bounce-back in the second quarter.
The Pound, meanwhile, edged higher versus many of its closest rivals despite the fact that the Bank of England (BoE) remained inactive. The appreciation is the result of traders feeling that holding the cash rate at this juncture is the right move for the British economy.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending in the region of 0.6506.
US Dollar (USD) Exchange Rate Forecast to Soften versus the British Pound as Futures Traders Pare Fed Bets
In response to a recent string of less-than-ideal domestic ecostats, the US Dollar is trending in a weaker position versus many of its currency competitors. Thursday has seen the ‘Greenback’ continue the trend despite an improvement in domestic data. This is likely to be the result of fears that the second-quarter will see a slowdown which will delay a benchmark rate increase.
Continuing Claims were forecast to drop from 2226k to 2207k in the week ending May 23rd, but the actual result was a drop to 2196k. In addition, Initial Jobless Claims bettered the median market forecast drop from 284,000 to 278, 000, with the actual result falling to 276,000. ‘This suggests businesses really did look through the weakness in the first quarter,’ said senior economist Ryan Sweet. ‘The job market continues to do reasonably well.’
The US Dollar to Pound Sterling (USD/GBP) exchange rate dropped to a low of 0.6515 today.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen versus the US Dollar after Inactive BoE
Ordinarily, a currency would experience minimal movement after its central bank remained inactive in a rate decision. However, given recent poor results from services and manufacturing data publications, most have seen the BoE’s decision to hold the lending rate as a positive move. Additionally, with futures traders delaying bests as to the timing of a Federal Reserve rate hike, the prospect of wider economic disparity with the US has eased a little.
Aiding the Sterling uptrend was a positive result from UK New Car Registrations which saw an annual increase of 5.7% in May. The growth has been attributed to heightened demand for eco-friendly and electric cars.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Forecast to Hold Losses on Lack of Data
Given the absence of further domestic data publications to provoke changes, the US Dollar to Pound Sterling (USD/GBP) exchange rate is likely to hold losses for the remainder of Thursday’s European session. Friday ought to see heightened USD/GBP volatility with several influential US data publications due and with the BoE set to release inflation projections for the next 12 months.
The US Dollar to Pound Sterling (USD/GBP) exchange rate climbed to a high of 0.6533.
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