British Pound to US Dollar (GBP/USD) Exchange Rate Halts Advances
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Sterling faltered as a UK report showed a steeper-than-forecast decline in the price of shop goods.
The BRC shop price index fell by 1.7 per cent in March year-on-year, more than the 1.5 per cent decline expected and up from an annual drop of 1.4 per cent in February.
However, declines in the Pound were limited and the currency remained stronger against the Euro as data showed that the UK’s trade deficit narrowed by more than expected in February.
The moderately upbeat result occurred as a slide in imports offset a 1.6 per cent decline in exports.
In February the trade gap came in at 9.1 billion Pounds, down from 9.5 billion Pounds the previous month and a slight improvement on the 9.2 billion Pound estimate.
Imports fell by 2.2 per cent, largely due to a decline in aircraft importing.
In the view of one London-based senior currency strategist; ‘While data has been mixed recently, the glass is more half full in the case of Sterling. But from a trading point of view, a lot of good news is already priced in. It will take something large for the Pound to appreciate further, such as the Bank of England indicating it might have to raise rates sooner than the market thinks’.
Unless the BoE makes a surprising move tomorrow, the Pound may continue trading in a comparatively narrow range.
Other developments which could have an impact on Sterling’s performance on Thursday include the publication of minutes from the March 18th-19th Federal Open Market Committee meeting, the UK RICS House Price Balance and the US monthly budget statement.
In other currency news, the Australian Dollar is still trading in the region of a five-month high against its US counterpart, but the South Pacific asset could experience a reversal of fortunes if tomorrow’s Australian employment report disappoints expectations.
The US Dollar is holding steady ahead of today’s big North American news and was little changed following the release of US mortgage applications data. Applications fell by 1.6 per cent in the week ending April 4th.
The British Pound is currently trading against the Euro in the region of 1.2144 and trading against the US Dollar in the region of 1.6755