British Pound to US Dollar (GBP/USD) Exchange Rate hit Weekly High Following Victorious Unionists
Scotland’s decision to remain united with the rest of the UK has seen demand for Sterling increase exponentially; racking up gains against all sixteen of its most traded currency competitors. The immediate aftermath of the vote saw the Pound reach a fresh weekly high against the ‘Buck’ (USD). The US Dollar has experienced a little volatility from Thursday’s mixed-bag of economic data publications, but is slowly clawing back the losses as the European session progresses.
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The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.6386.
Thursday’s build-up to the Scottish referendum saw Sterling make slight gains as traders generally acknowledged that the voting would go in favour of the pro-unionists. This was in spite of poor retail sales data which fell below the median market forecast. The British economy has continued to struggle from a lack of correlation between wage growth and inflation. Wages showed a particularly cool increase of 0.6% which is the slowest pace of growth since comparable records were introduced in 2001. Inflation fell from 1.6% to 1.5% which is going in the wrong direction given the Bank of England’s 2.0% target.
The US Dollar gained a little momentum on Thursday after traders had digested the dovish tone of the Federal Reserve’s outlook on monetary policy. Interest rate hawks will have been disappointed at the lack of initiative, especially considering that Thursday’s labour market data printed relatively positively. Both initial jobless claims and continuing claims showed a positive declination from the previous figures having eclipsed the market consensus.
The Pound Sterling to US Dollar exchange rate has hit a low today of 1.6349.
Friday morning saw the conclusion of the Scottish referendum in which the Unionists won the vote by a margin of 55%. Scotland is likely to benefit from greater devolution, however, as Prime Minister David Cameron states; ‘Scotland voted for a stronger Scottish Parliament backed by the strength and security of the United Kingdom and I want to congratulate the No campaign for that – for showing people that our nations really are better together. I also want to pay tribute to Yes Scotland for a well-fought campaign and to say to all those who did vote for independence: ‘we hear you’. We now have a chance – a great opportunity – to change the way the British people are governed, and change it for the better’.
Despite a lack of economic data the US Dollar has gradually gained over the course of Friday. This is most likely attributed to trader risk aversion from the commodity-correlated currencies and all the issues from global commodity price drops.