British Pound to US Dollar (GBP/USD) Exchange Rate Forecast to Stagnate
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In the last year, the Pound has advanced 12.4% higher against the ‘Buck’; however now economists are suggesting that any further gains for Sterling will be limited.
An expert in the field, for the Bank of America, MacNeil Curry, has stated: ‘Cable’s [GBP/USD] been a pretty sizable uptrend for the past year and a half, but there’s a whole host of signs that say—from the perspective of momentum pattern recognition as well as a whole bunch of resistance areas—that further gains should be limited.’
Furthermore, some believe that the US central bank, the Federal Reserve, will become under increasing pressure to raise interest rates sooner than expected.
President of the St Louis Fed, James Bullard, has suggested: ‘If macroeconomic conditions continue to improve at the current pace, the normalisation process may need to begin sooner rather than later.’
However, Chairwoman for the Federal Reserve, Janet Yellen, has refused to entertain speculation about a specific time-frame for rate hikes, stating: ‘It would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule.’
Bullard however is suggesting that the US interest rate hikes should commence in the first quarter of 2015.
Bullard stated: ‘I want to make sure there’s a bounce-back in the second quarter and that things look like they are on track to grow at 3% or better in the second half of the year, which is what I’m expecting.’
Furrthermore, Bullard continued: ‘Normalization will take a long time, and current policy settings are far from normal, suggesting an earlier start.’
It appears speculation over the US interest rate hikes will continue in the near future as the US continues to publish favourable employment data which Yellen has stated will help fuel the hikes.
Friday will be an influential day for the US with the University of Michigan Confidence Survey data released, alongside Leading Indicators figures.
Conversely the Pound has no further data releases this week, lending to the US statistics to alter the Pound to US Dollar exchange rate.
Tuesday however, will prove highly influential for the currency pairing as the UK will publish Public Finances, and Public Sector Net Borrowing data, whilst the US will see the release of Consumer Price Index figures alongside Existing Home Sales figures.