Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Edge Lower as Potential Currency War Spurs Safe-Haven Demand
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.21% on Friday morning.
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In the aftermath of the decision by the European Central Bank (ECB) to use expansive measures in order to combat deflation in the Eurozone, market sentiment dampened considerably. This is especially true with anxieties mounting that the spate of policy easing from the Bank of Canada (BOC) and the ECB will encourage others to follow suit. The US Dollar (USD) strengthened versus most of its competitors thanks to its safe-haven qualities.
The Pound Sterling, meanwhile, is generally trending higher versus its major peers after December’s retail sales bettered estimates.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4972.
Pound Sterling (GBP) Exchange Rate Gains on Retail Sales
After British data printed positively on Friday (in comparison with the last few days at least), the Pound strengthened versus the majority of its most traded currency rivals.
Retail Sales were up 4.3% in December year-on-year, bettering the median market forecast of a drop from 6.8% to 3.4%. In addition, Retail Sales including Auto eclipsed the market consensus of a drop from 6.4% to 3.0%, with the actual result only falling to 4.3%.
James Knightley of ING Bank said; ‘With real incomes set to rise due to rising wage growth and falling inflation, tax cuts coming through and employment continuing to make strong gains, 2015 in general should see consumer spending perform well.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate dropped to a low today of 1.4956.
US Dollar (USD) Exchange Rate Gains on Damp Risk Sentiment
The combination of the Swiss National Bank (SNB) dropping its Euro cap, policy easing from the BOC, policy easing from the ECB and low oil prices has caused trader risk sentiment to fizzle out significantly. This has caused the US Dollar to strengthen versus nearly all of its major competitors thanks to its safe-haven qualities.
Additional gains are as a result of widening policy divergence between the Federal Reserve and other major central banks.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate
With several potentially influential US data publications due later on Friday afternoon, there is the potential for the Pound Sterling to US Dollar (GBP/USD) exchange rate to fluctuate. However, safe-haven demand is likely to outweigh data.
The Pound Sterling to US Dollar (GBP/USD) exchange rate reached a high today of 1.5024.