Looking ahead and a strong US Durable Goods Orders figure could boost the Dollar as it would suggest an improvement in household spending and consumer credit.
Foreign Currency Market Update – GBP / USD Update
The Pound to US Dollar exchange rate reached a four month high on Tuesday as the pair briefly breached the psychological 1.60 mark, however strong technical resistance ensured that Sterling remained in the 1.59s as the week progressed.
Last week GBP/USD fell to a 6-day low of 1.5771 as Thursday’s UK Retail Sales figures came in lower than expected at 1.0%. The market consensus had suggested that February’s figure would be 2.3%, so when the ecostat was announced as markedly weaker it sent Sterling down by over a cent against the Dollar. The Pound managed to claw itself back up to highs of 1.6001, that have not been seen since November last year, as Federal Reserve Chairman Ben Bernanke gave a dovish speech on Monday in which he suggested that accommodative policy would need to be sustained in order to make further progress in terms of reducing the jobless rate and bolstering growth. Many investors took this as a sign that more quantitative easing is on the cards and this sent the Dollar tumbling against the majors.
Today’s revised UK GDP figures showed that the economy shrank by -0.3% in the fourth quarter of last year. The figure is marginally worse than the Office for National Statistics’ previous estimate of -0.2% and this stoked fears that the UK could be heading into a technical recession, and also increased the case for further central bank intervention in the form of quantitative easing. This caused the Pound to stutter against its major rivals immediately after the revision was announced, but Sterling’s initial .40 cent loss against the US Dollar quickly consolidated to a less significant drop of .11 cents.
Looking ahead and a strong US Durable Goods Orders figure could boost the Dollar as it would suggest an improvement in household spending and consumer credit. But if expectations are not met because of subdued wage growth and waning consumption then it could reignite Sterling’s push towards the elusive 1.60 mark.
Summary of major upcoming data releases that we think may move the market.
- The Pound rallied to a 10-day high of 1.5914 against the US Dollar on Tuesday
- The Pound rallied to a fresh 9-month high above 1.19 against the Euro exchange rate
- Pound Sterling to US Dollar Foreign Currency Exchange Rate Forecast – Sterling hits 15 month high…
- The pound has maintained its 15-month high against the Euro exchange rate
- Pound Sterling to Australian Dollar Foreign Currency Exchange Rate Forecast – Exchange rate hits 3 month high…