Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: BoE Policymakers United in Keeping Interest Rates Low
The Pound Sterling to US Dollar (GBP/USD) exchange rate clawed back some losses on Thursday, after Wednesday’s disappointing Bank of England (BoE) announcement.
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The Pound Sterling to US Dollar (GBP/USD) exchange rate sank after the Bank of England (BoE) meeting minutes emerged, despite upbeat unemployment data.
The UK Unemployment Rate sank from 6.0% to 5.8%, bypassing 5.9% forecasts. However, the Bank of England announced that all policymakers had voted unanimously to keep interest rates on hold, the first united vote in five months.
Foreign exchange strategist Manuel Oliveri commented: ‘Two more policymakers have voted for no change and that means there is unlikely to be a rate hike over the next 12 months.’
Earlier… The Pound Sterling to US Dollar (GBP/USD) exchange rate made modest advances in Wednesday’s European trading ahead of UK Unemployment Rate and Employment Change figures.
If forecasts are correct and unemployment decreases, the Pound Sterling to US Dollar (GBP/USD) currency pair could rally.
The Pound Sterling to US Dollar (GBP/USD) exchange rate recorded gains during Tuesday’s trading ahead of Wednesday’s highly influential day for the UK.
US Dollar declines were also enabled as investors turned away from safe-haven currencies after Chinese growth outperformed forecasts. China’s Gross Domestic Product (GDP) remained at 7.3% in the fourth quarter of 2014, rather than falling to 7.2% as predicted.
The data came as a welcome surprise amid steep cuts to global growth forecasts by the International Monetary Fund (IMF). The IMF has now forecast only 3.5% growth in 2015, a far cry from the original 3.8% prediction.
IMF chief economist Olivier Blanchard stated: ‘The world economy is facing strong and complex cross currents. On the one hand, major economies are benefitting from the decline in the price of oil. On the other, in many parts of the world, lower long-run prospects adversely affect demand, resulting in a strong undertow.’
UK Unemployment Rate Fall Forecast – Pound Sterling to US Dollar (GBP/USD) Gains
Meanwhile, with a lack of UK data, the Pound has been trending higher as investors anticipate a fall in unemployment on Wednesday.
The UK Unemployment Rate is expected to decrease from 6.0% to 5.9% in the three months through November and could be a highly favourable development for the Pound Sterling exchange rate.
In addition Employment Change is predicted to grow by 74K, while Average Weekly Earnings is also expected to increase from 1.4% to 1.7%.
To add to the excitement, the Bank of England (BoE) will release its meeting minutes on Wednesday which will detail the divergence of votes at the last Monetary Policy Committee (MPC) meeting.
Two of the nine MPC members have voted to increase UK interest rates with immediate effect in the last four meetings and investors are hoping two or more members continued to do so as it would suggest we’re inching closer to rate hikes.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The Pound Sterling to US Dollar (GBP/USD) exchange rate could fluctuate later in Tuesday’s session with Bank of England official Jon Cunliffe expected to speak.
However, the US NAHB Housing Market Index is scheduled for release later on Tuesday and has seen economists forecast an advance from 57 to 58.
In addition, Federal Reserve governor Jerome H. Powell will also be speaking in Washington.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5154. The US Dollar to Pound Sterling (USD/GBP) exchange rate resides at 0.6601.