Pound Sterling to US Dollar Exchange Rate Forecast: GBP/USD Flat even as Dollar Falls
The Pound Sterling to US Dollar (GBP/USD) exchange rate put on a patchy performance on Tuesday, with the Pound coming under pressure from disappointing domestic stats and the ‘Greenback’ fluctuating in response to Fed commentary and manufacturing figures.
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The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.6416
Overnight the US Dollar came under a little strain as a report showed that US existing home sales unexpectedly declined by -1.8% in August. The currency was also affected by comments issued by William Dudley, President of the Federal Reserve of New York.
Dudley argued that an overly strong domestic currency would have a negative impact on the future economic performance of the US, led by a decline in exports, import growth and dampened inflation.
However, although Dudley highlighted these concerns he intimated that the strength of the US Dollar would only be a worry for the Federal Reserve if it prevented the central bank achieving its fiscal goals. Dudley remarked; ‘If the Dollar were to strengthen a lot, it would have consequences for growth […] Obviously, as the Dollar moves, that affects the appropriateness of a given monetary policy to achieve those objectives.’
Any strength the comments gave the GBP/USD exchange rate were short lived however as profit taking off the back of the Scottish referendum and disappointing UK data left the Pound fluctuating.
Less-than-impressive UK public finance figures and a dip in the number of loan applications for mortgages caused some Sterling softness during the European session.
That being said, the Pound to US Dollar exchange rate was able to continue trending around the day’s opening levels after the US published its Manufacturing index.
The US Manufacturing PMI was shown to have held at 57.9 in September instead of advancing to 58.0 as forecast. This still keeps the gauge well above the 50 mark separating growth from contraction.
The report detailed the fastest increase in manufacturing sector payrolls since March 2012 and prompted this response from economist Chris Williamson; ‘The flash PMI signalled another month of impressive growth of the US manufacturing economy. The third quarter as a whole has seen the strongest expansion since the sector began to recover from the financial crisis.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
With several prominent Federal Reserve officials expected to offer comments on the US economic outlook and the timeline for increasing interest rates in the hours ahead, the Pound to US Dollar exchange rate could experience further movement before the close of the North American session.
UK data is lacking tomorrow, but GBP/USD volatility could be inspired by US MBA Mortgage Applications figures and New Home Sales data.
Investors will also be looking ahead to Thursday and Bank of England Governor Mark Carney’s speech in Wales.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading in the region of 1.6364.
Although the US Dollar softened against several of its major currency counterparts following Fed President Dudley’s assertion that a strong domestic currency could undermine growth, the Pound failed to benefit from the ‘Greenback’s weakness.
The US Dollar was trending in a moderately softer position against several of its most-traded currency counterparts, but yesterday’s UK public finance figures were also keeping the Pound depressed.
Any volatility in the Pound Sterling to US Dollar exchange rate will be caused by today’s US news, including the nation’s US MBA Mortgage Applications figures and New Home Sales figures. A surprising result could spark movement.