British Pound to US Dollar (GBP/USD) Exchange Rate Gains on Consumer Confidence
A reversal in fortune for the Pound has seen its bearish behaviour averted after Friday’s British economic data produces better-than-expected results.
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Over the course of the week Sterling has struggled versus most of its major peers. This was primarily due to a distinct lack of influential domestic data publications to put a halt of the downtrend which began at the end of last week.
Problems for Sterling continued to mount as the week progressed with traders reluctant to invest amidst the ongoing Scottish bid for independence. With very little direction in terms of knowing how the referendum will play out; investors have pulled away from sterling in favour of currencies with less potential risk.
A succession of negative Eurozone economic data publications added to Sterling’s general declination. Last week’s disappointing Eurozone manufacturing data was perhaps the biggest contributor to the Pound’s downfall, especially given the Eurozone and UK’s close trading relationship.
In complete contrast, the first half of the week saw the US Dollar top the charts with bullish runs across the board. A series of progressively impressive economic data publications saw the US Dollar soar, but the ‘Buck’ (USD) softened considerably on Wednesday as investors chose to lock in their profits ahead of Thursday’s crucial Gross Domestic Product data.
‘Greenback’ (USD) managed to continue trending high versus the majority of its peers on Thursday despite the bulk of traders buying their profits prior to the GDP data publication. The reason for this is twofold: firstly the Gross Domestic Product exceeded expectations, and secondly the increasing geopolitical tensions saw traders flock to safe haven currencies.
The Pound Sterling to US Dollar exchange rate has hit a low today of 1.6574.
Friday’s British economic data has printed positively; going some way towards repairing the damage of a long period of bearishness.
The GfK Consumer Confidence Survey was forecast to retract by -1 having posted the deficit figure of -2 previously. The actual result, however, was a surplus figure of 1, exceeding expectations with the immediate effect of strengthening Sterling across the board.
The Nationwide House Px saw a yearly growth of 11.0%, although it was only forecast to have grown by 10.2%. The extra growth is likely to be attributed to the monthly figure which showed a growth of 0.8% in August despite having been forecast to increase by 0.1%.
The Pound has also been bolstered by a set of impressive Eurozone economic data publications. The year-on-year Core Consumer Price Index grew by 0.9%, exceeding expectations of a 0.8% increase. The Eurozone Unemployment Rate stayed faithful to the forecast figure of 11.5%.
There are several US publications, of varying influence, due later today (Friday). Perhaps the most important of these publications, in terms of gauging the US economic standing and provoking wider market movement, is the yearly Core Personal Consumption Expenditure data which has been forecast at 1.5%.
The Pound Sterling to US Dollar exchange rate has hit a high today of 1.6608.