The Pound failed to breach key resistance levels at 1.6300 last week against the US Dollar.
Foreign Currency Market Update – GBP / USD Update
The Pound failed to breach key resistance levels at 1.6300 last week against the US Dollar, but did manage to mount a short-lived rally that peaked at 1.6272 in response to a slight upgrade to the UK’s second quarter GDP figure and an awful US Durable Goods Orders print.
Last week started fairly slowly for GBP/USD with no fundamental data releases of noteworthy importance. The US Dollar managed to post a subtle 0.2 cent gain against Sterling as IMF Managing Director Christine Lagarde suggested that global growth forecasts could be cut in the near future due to uncertainty as to whether policymakers will follow through on their pledges. Lagarde’s statement led to a small decrease in risk appetite and subsequently the US Dollar benefitted from a small portion of defensive inflows.
Sterling decreased by a further 0.3 cents on Tuesday against the US Dollar as US Consumer Confidence rose to a 7-month high of 70.3 and GBP/USD declined again on Wednesday by 0.2 cents due to a poor day for European markets. Heavy sell-offs in Spanish and Italian stock markets reduced investors’ appetite for riskier assets and boosted the ‘Buck’s’ appeal.
On Thursday the Pound grew by around 0.7 cents against the US Dollar in response to an upward revision to the UK’s second quarter growth figure, from -0.5% to -0.4%, and an awful pair of US ecostat releases. The annualised US Q2 GDP result was downgraded from 1.7% to 1.3% and US Durable Goods Orders declined to a dismal -13.2%, marking the worst drop in ouput for over 3.5 years.
Sterling’s ascendance continued on Friday morning as GBP/USD reached a weekly high of 1.6272, but a technical rejection took the pair lower by over a cent as markets consolidated for the month end.
Looking ahead at the week to come and the Pound to US Dollar exchange rate is unlikely to make a concerted push above key resistance at 1.6300 unless PMI results for the Construction and Services sector strongly exceed analysts’ expectations. The Manufacturing report has already printed at a weaker-than-expected score of 48.4, which has dampened hopes of a strong rebound in UK third quarter GDP.
It is widely anticipated that the Bank of England will leave interest rates on hold during October, and a further round of quantitative easing is also unlikley to be announced at Thursday’s press conference. However any hints towards further monetary easing in the near future could lead to a pullback for the Pound against the US Dollar. Sterling should find decent support in the region of 1.6090, and GBP/USD is unlikely to fall below this level.
Summary of major upcoming data releases that we think may move the market.
- The Pound failed to breach the 1.6300 mark again yesterday
- Pound to US Dollar Exchange Rate Forecast: The Pound briefly breached resistance levels in the region of 1.5740
- Pound to US Dollar Exchange Rate Forecast: The Pound broke through strong resistance levels in the region of 1.5740 against the US Dollar
- Sterling, US Dollar and Euro exchange rates – The Pound failed to receive a boost against the majors
- Sterling Euro US Dollar Foreign Currency Forecast – The Pound encountered strong resistance in the region of 1.6170 against the U.S Dollar