British Pound Exchange Rate Forecast: GBP/USD, GBP/CAD, GBP/AUD, GBP/NZD – Yellen Comments Weigh on ‘Buck’
The British Pound to US Dollar (GBP/USD) exchange rate was trending higher on Wednesday while the British Pound to Canadian Dollar (GBP/CAD), British Pound to Australian Dollar (GBP/AUD) and British Pound to New Zealand Dollar (GBP/NZD) exchange rates all fell.
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Riskier—yet higher yielding—currencies such as the Canadian, New Zealand and Australian Dollars were offered some support after US Federal Reserve Chairwoman Janet Yellen spoke on the topic of rate hikes.
Yellen’s Dovish Comments Pressure US Dollar (USD) Exchange Rate Lower
Yellen suggested that increases in borrowing costs could be a way off and would be driven by data. In the last few months the Fed appeared to take a hawkish turn as the US economy geared up for interest rate hikes; however, the tumbling price of oil has seen inflation drop the world over and central banks have become increasingly dovish.
Yellen stated: ‘If economic conditions continue to improve, as the committee anticipates, the committee will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis.’
‘Before then, the committee will change its forward guidance. However, it is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings.’
Meanwhile, the Canadian Dollar climbed after Yellen’s statements. Weaker US data also helped the ‘Loonie’ edge further away from a recent six-week low against the US Dollar (CAD/USD).
The Canadian Dollar was also offered support when Bank of Canada (BOC) Governor Stephen Poloz suggested that the recent rate cut offered the central bank time to gauge the state of the economy in response to the plummeting prices of oil.
Poloz stated: ‘The oil-price shock is an important setback in our progress toward full capacity, full employment and stable inflation because it is a net negative for economic growth.’
Meanwhile the Australian and New Zealand Dollars were also offered the opportunity to gain on the Fed statements with higher yielding interest rates luring investors.
The ‘Aussie’ and the ‘Kiwi’ were additionally supported by China’s latest HSBC Manufacturing Purchasing Managers Index, which rose from 49.7 to 50.1 in February. Any reading above the 50.0 benchmark denotes expansion.
Wednesday could see further movement in the New Zealand Dollar with the release of New Zealand’s Trade Balance. At present, economists have forecast a further widening in the trade deficit.
British Pound Exchange Rate Forecast: GBP/USD, GBP/CAD, GBP/AUD, GBP/NZD
The British Pound exchange rate could fluctuate dramatically on Thursday with the emergence of UK Gross Domestic Product figures. Economists have forecast 2.7% growth in the fourth quarter of 2014, the same as Q3.
The British Pound to US Dollar (GBP/USD) exchange rate resides at 1.5491. The US Dollar to British Pound (USD/GBP) exchange rate is trending in the region of 0.6458.