GBP to USD Gains Fractionally Ahead of US Labour Market Data
Whilst Bank of England Governor Mark Carney and other high-profile policymakers make their testimony about Augusts’ inflation report the Pound to ‘Buck’ (USD) exchange rate has held fairly steady. However, at this early stage the live blog doesn’t indicate any discussion over inflation as yet, but rather a full-bodied discussion on the Scottish referendum and Sterlingisation.
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The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.6141.
Life for Sterling has been extremely volatile as the Scottish bid for independence dominates trader focus. In a speech made to the TUC Congress in Liverpool BoE Governor Mark Carney made a hawkish statement is which he said he did not approve of a currency union without a union of nations. In the immediate aftermath of the statement the Pound gathered a little momentum, but the general negative sentiment towards Sterling has anchored any potential healthy gains.
Sterling issues were compounded by a mix-bag of economic data publications on Tuesday. Total Trade Balance widened unexpectedly from -£9.4 billion to -£10.2 billion in July which has been attributed to imports exceeding exports. Both Manufacturing and Industrial Production printed positively however. This could be an early sign that the objective to transform Britain from a consumer-based economy to an export led economy is slowly coming to fruition.
The US Dollar has experienced a very different story to that of Sterling over the past week. With speculations rife of a Federal Reserve rate hike the demand for the dollar has rocketed. The Federal Reserve Bank of San Francisco stated that economists have been underestimating the pace of rate revisions.
The GBP to USD exchange rate has hit a low today of 1.6050.
Sterling generally softened against most of its major competitors on Wednesday as traders halted in anticipation of the testimony by Bank of England policymakers on Augusts’ inflation report. Recent developments in said testimony show an interesting comment from one of the two dissenters from the previous monetary policy report. Martin Weale said that he ‘voted to raise rates in August because he thought inflation would be higher than the Bank’s forecasts.’ He also stated that wage growth acceleration was close at hand. However, Deputy Governor Minouche Shafik responded by saying; ‘signs of imminent wage growth have proved misleading in the past’.
US data has been relatively negative on Wednesday. MBA Mortgage Applications contracted by -7.2% which is a rather large declination from the previous figure of 0.2%. Wholesale Inventories was expected to grow by 0.5% in July but the actual data showed only a 0.1% increase.
The GBP to USD exchange rate has hit a high today of 1.6170.
The solitary British economic data publication on Thursday printed relatively negatively. However this hasn’t negatively affected ‘Cable’ (GBP/USD) as traders await Thursday afternoon’s key US labour market data. The UK RICS House Price Balance was expected to dip slightly from the previous figure of 49% to 47%, but the actual data came in at a disappointing 40%.
Thursday’s US data will be of high importance both economically and as a driver for US Dollar volatility. The Federal Reserve have linked a rate hike revision to improved labour market data; so if continuing claims and initial jobless claims meet with or exceed the forecast figures the pressure on the Fed will mount exponentially.