Pound Sterling to US Dollar (GBP/USD) Exchange Rate Trends in Narrow Range before Jackson Hole
The Pound Sterling to US Dollar (GBP/USD) exchange rate softened to a four and a half month low on Thursday but was trading in a comparatively narrow range ahead of tomorrow’s highly anticipated gathering of central bankers in Wyoming.
If you're looking to make an international money transfer, we recommend TorFX.
During the European session the Pound came under pressure following the publication of UK retail sales figures for July.
The sales data revealed a smaller-than-anticipated annual gain, taking some of the shine off yesterday’s surprisingly hawkish Bank of England (BoE) meeting minutes.
However, while Sterling initially dipped against the majority of its most traded currency counterparts, it later moderated its position as investors dwelt on yesterday’s surprising news that two of the nine-member Monetary Policy Committee voted for an interest rate increase in August.
While the dissenting votes of Martin Weale and Ian McCafferty are still seriously outweighed, the development did cause yet another reassessment of speculation surrounding the timeline for raising interest rates.
As argued by one former treasury official; ‘Over the next few months [the rate decision] is going to become more finely balanced. If we get further decent data for the UK we will start to see some movement among those members, and that firm majority we have now will start to splinter.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.6601.
On Wednesday the US Dollar was also boosted by meeting minutes.
The Federal Open Market Committee meeting minutes had a slightly hawkish edge which stoked US rate hike speculation.
The Pound Sterling to US Dollar exchange rate was only slightly strengthened during Thursday’s North American session in spite of the release of several encouraging economic reports for the US.
Initial jobless claims were shown to have fallen by more than anticipated in the week ending August 16, coming in at 298,000 rather than the 303,000 anticipated.
US Manufacturing PMI also strengthened unexpectedly, surging from 55.8 to 58.0 rather than dropping to 55.7 as predicted.
Markit economist Tim Moore said this of the result; ‘August’s survey delivers further evidence that robust manufacturing growth momentum has been sustained through the third quarter, with overall business conditions improving at the fastest pace for over four years. Stronger employment growth was a key factor boosting the headline PMI reading in August. Staff hiring picked up to its sharpest for around a year-and-half, providing an early indication that the US manufacturing sector has generated in excess of 20,000 jobs over the month in August.’
Meanwhile US existing home sales were shown to have increased by 2.4% in July on a month-on-month basis. A monthly decline of -0.5% had been projected.
While data of this calibre would ordinarily have pushed the US Dollar considerably higher against the Pound, gains were limited ahead of tomorrow’s central banker meeting in Jackson Hole. If Yellen adopts a hawkish tone the US Dollar could rally before the weekend.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
UK data is lacking tomorrow which may limit Pound movement.
The main cause of currency market volatility will definitely be the Jackson Hole symposium.
Next week US reports to look out for include Markit Composite and Services PMI, New Home Sales figures, Durable Goods Orders, Consumer Confidence, MBA Mortgage Applications, second quarter GDP, Personal Consumption and Pending Home Sales.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading in the region of 1.6587.