Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Soften as US Payrolls Jump
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened by around -0.20% on Friday afternoon as the US NFP report exceeded expectations.
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The US Dollar edged higher versus many of its major peers on Friday as the highly-influential US Non-Farm Payrolls data showed a stronger-than-anticipated increase in positions. Although the unemployment rate grew slightly, this was due to a rise in the nation’s participation rate.
The Pound Sterling, meanwhile, is generally trending lower versus its most traded currency rivals as a result of disappointing UK trade data. The declination has been sluggish, however, with speculation mounting that the Bank of England (BoE) will be one of the first major central banks to tighten policy.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5288.
Pound Sterling (GBP) Exchange Rate Edges Lower on Trade Data
British trade data printed disappointingly on Friday, easing pressure on the BoE to hike rates in the near future. Total Trade Balance, Non EU Trade Balance and Visible Trade Balance all widened beyond expectations.
‘The initial reaction to these figures will probably be disappointment,’ Rob Wood, chief UK economist at Berenberg said. ‘Poor old UK, which just cannot seem to achieve any balance at all in its recovery and remains saddled by its proximity to the Eurozone.’
However, the declination has been slow moving thanks to continued support from rate hawks. Although the BoE Monetary Policy Committee kept rates on hold after their most recent policy meeting, the fact that they avoided easing policy whilst other major central banks stimulate recovery was treated positively by traders.
The Pound Sterling to US Dollar (GBP/USD) exchange rate has fallen to a low today of 1.5256.
US Dollar (USD) Exchange Rate Strengthens on Employment Change
The US Unemployment Rate gained from 5.6% to 5.7% in January, despite predictions that unemployment would remain unchanged. This had no impact on the US Dollar, however, after Change in Non-farm Payrolls eclipsed the median market forecast of 230,000 new positions, with the actual result showing 257,000 newly employed.
‘The data brings the possibility of a rate increase by the Fed in June on the table,’ said economist Gary Pollack.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Hold Losses
With market sentiment dampened by geopolitical tension between Greece and Germany, the Pound Sterling to US Dollar (GBP/USD) exchange rate is likely to hold losses on Friday. That being said, there is the possibility for US Dollar volatility with the publication of consumer credit data, due later on Friday evening.
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced to a high of 1.5352 today.