GBP/USD Exchange Rate Falls to One-Year Low on Service Sector Flop, US ISM Declines
GBP/USD Falls from 1.60
The Pound Sterling to US Dollar (GBP/USD) exchange rate started the European session trending around the support level of 1.60 but fell to 1.58 following the publication of disappointing UK data.
If you're looking to make an international money transfer, we recommend TorFX.
On Tuesday the US Dollar came under pressure as US Factory Orders fell and the nation’s trade deficit widened.
The increase in the shortfall was largely due to declining exports and economics writer Josh Boak noted; ‘Economic slowdowns in Europe and China appear to have hurt demand for American-made goods. Since September, the Dollar has appreciated in value more than 4% against the Euro to 1.25 Dollars, making US products less competitively priced abroad. Exports fell 1.5% to 195.6 billion US Dollars, led by declines in shipments of industrial supplies, consumer products and capital goods such as engines and computers.’
However, the US Dollar was able to recoup losses as the US midterm elections resulted in a Republican victory.
Pound Sterling (GBP) Softens across the Board
Overnight the Pound came under pressure as the British Retail Consortium’s Shop Price Index eased to -1.9% from -1.8% instead of rising to -1.7% as forecast.
The BRC stated; ‘Food inflation edged down to its lowest level on record of 0.1%. For the first time since Feb 2010, fresh food experienced deflation with milk, cheese, eggs, vegetables and convenience food all cheaper than they were a year ago. This should mean great deals for shoppers as they start stocking up on seasonal fare. With the current competitive environment, retailers are passing most of these savings onto consumers. As Christmas swiftly approaches, there is plenty of evidence to suggest that budgets will go a little bit further this year.’
Further Pound declines were recorded as the UK’s Markit Services PMI fell by more-than-anticipated in October. It had been expected that the index would soften from 58.7 to 58.5 but it actually fell to 56.2.
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell by 0.75% during local trading and hit a low of 1.5864.
GBP/USD Slumps 0.7%
In the hours following the publication of the UK services report, the GBP/USD exchange rate fell by 0.7%, sliding to its lowest level since November 2013.
if today’s US data impresses, making it increasingly likely that the Federal Reserve will increase interest rates before the Bank of England, the Pound Sterling to US Dollar (GBP/USD) could brush fresh lows.
Pound Sterling to US Dollar (GBP/USD) Fluctuates after Employment Gain, ISM Decline
The Pound Sterling to US Dollar (GBP/USD) exchange rate fluctuated during the North American session but managed to recover some lost ground against the US Dollar and push back beyond 1.59 as the US published mixed economic reports.
The ADP employment data smashed estimates, showing jobs growth of 230,000 rather than the 220,000 forecast.
However, the US ISM Non-Manufacturing Composite measure, which had been expected to slide to 58 from 58.6, actually fell to 57.1.
The final Markit Services PMI for October came in at 57.1, down from an initial estimate of 57.3.