British Pound to US Dollar (GBP/USD) Exchange Rate Awaits US CPI Data
The Pound (GBP) is currently trading at 1.7063 against the US Dollar (USD), in anticipation for the US Consumer Price Index figures released later this afternoon. The Pound has seen highs of 1.7083 so far this session whilst dipping to lows of 1.7060.
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The US Dollar could be set to rally against other major currencies as all eyes await the US Consumer Price Index statistics this afternoon. Current forecasts by economists predict that the inflation data will remain at 2.1%.
US figures are currently under intense observation as Chairwoman for the Federal Reserve, Janet Yellen, has stated that any increase in interest rates will be driven by positive US Data.
Unemployment data released on Thursday will be of particular significance as Yellen has suggested that employment data will be one of the key factors to promote a stable economy that could withstand interest rate hikes.
An expert in the field, Joe Manimbo, commented: ‘Further signs of a rebounding US economy could see the “Greenback” add to the gains that last week powered it to five-month peaks against the Euro.’
However despite the US Dollar trading well with the potential to trade higher amid positive data releases, prospects of interest rate hikes in the US are still out of reach.
A foreign exchange expert Kathy Lien stated: ‘While we agree that inflation in the US most likely bottomed, it is still not a level that would accelerate Fed tightening.’
The UK however has received a mixed bag of results of late, with Bank of England (BoE) Governor, Mark Carney, stating: ‘The UK economy is currently unbalanced internally and externally. Sustained borrowing from abroad to consume at home is hardly a recipe for a balanced and sustainable expansion.’
Furthermore, UK businesses are stating their worries about the impact of a strong Pound exchange rate in the currency market, forecasting losses resulting in up to £55 million.
Economist for RBC Capital Markets, Sam Hill, commented: ‘With the appreciation of Sterling, the near term prospects aren’t particularly strong,’ for the prospect of rebalancing. ‘In terms of the modest success with growing the contribution of net trade, that’s only going to be hampered by a more aggressive approach on interest rates.’ Hill continued that the Pound may gain further.
The UK has seen the release of Public Finances and Public Sector Net Borrowing data on Tuesday, which have both proved favourable. The UK Public Finances rose to 11.8B in June, a leap higher than May’s 8.4B. Furthermore Public Sector Net Borrowing data was published at 9.5B in June, a rise from the forecast 9.4B.
The USD to GBP exchange rate is currently trading at 0.5863 in the currency market, with the potential for movement this afternoon as the US inflation data is released, however positive UK statistics could prove supportive to the Pound.