GBP to USD Exchange Rate Strengthens on UK Economic Data
As traders decided to lock their profits on Wednesday the US Dollar softened considerably across the board. However, the recent positive Gross Domestic Product (GDP) publication and mounting tensions between Russia and Ukraine has seen an upward surge for the ‘Buck’ (USD).
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In the absence of influential economic data to gauge movement; Sterling has generally trended downwards versus the majority of its major peers.
The ongoing debate concerning the Scottish bid for independence has not helped the situation for Sterling. With the Scottish population seemingly undecided and Scottish business’ unhappy about the upheaval the change could potentially bring; the debate has produced far more questions than it has done answers. The unknown is a major hindrance for traders who have generally pulled away from the Pound for less risky currencies.
Domestic data from the Eurozone has been a contributing factor to the bearish Pound. The trading relationship between the UK and the Eurozone is such that poor economic data publications have a mutually detrimental effect.
Conversely, the US Dollar has enjoyed a bullish run for the past two weeks. A succession of positive domestic data results had boosted the ‘Greenback’ (USD) despite a dovish statement given by Federal Reserve Chair Janet Yellen at the Jackson Hole symposium.
The ‘Buck’ has also benefitted from the dismal performance of the Euro as the US Dollar to Euro pairing is the most popular currency exchange.
Wednesday saw the ‘Greenback’ soften across the board after investors chose to lock their profits ahead of Thursday’s Gross Domestic Product data.
The Pound Sterling to US Dollar exchange rate has hit a low today of 1.6563.
Thursday’s British economic data has had little effect on market movement but may be of interest to those backing the Pound as a gauge for economic standing. The Lloyds Business Barometer fell from 52 to 47. CBI Reported Sales exceeded the forecast figure of 27 with the actual result printing at 37.
In terms of US domestic data there have been several publications of varying influence. Chief amongst these is the second quarter Gross Domestic Product data. The GDP was expected to have grown by 3.9% which was fractionally less than the previous growth of 4%. The actual data, however, showed a growth of 4.2%. Those investors who chose to lock their profits on Wednesday will perhaps feel disappointed they didn’t hang on for that peach of a result.
Core Personal Consumption Expenditure, Personal Consumption and Pending Home Sales all produced positive results as well.
Those speculating on a near-term US interest rate hike will be pleased to see some positives from the labour market data published on Thursday. Although Continuing Claims was seen to rise above expectations, the Initial Jobless Claims data showed a positive decline at 298,000 despite having been forecast at 300,000.
The US Dollar is likely to trend upwards again amidst the geopolitical tensions between Russia and Ukraine. As the semantic field of war becomes ever present in the news; traders are likely to revert to risk aversion tactics and flock to safe haven currencies such as the US Dollar.
The Pound Sterling to US Dollar exchange rate has rallied on Friday due to an impressive set of British domestic data publications on.
The GfK Consumer Confidence Survey was forecast to retract by -1 having declined previously by -2. The actual result was a surprising surplus figure of 1 and has gone some way towards helping Sterling claw back the losses experienced over the course of the week.
Also the Nationwide House Px showed a 0.8% growth in August with the yearly figure hitting 11.0% despite having only been forecast to show 10.2% growth.
‘Cable’ (GBP/USD) may well experience a shift later in the day ahead of several influential US economic data publications. Perhaps the most important of these is the Core Personal Consumption Expenditure.