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British Pound to US Dollar Exchange Rate Recovers from Weekly Lows on Latest Bank of England Signals
Published: 21 Feb at 5 PM Tags: Pound Sterling, Euro Exchange Rate, Dollar Exchange Rate, Currency Exchange, Euro Crisis, UK, Exchange Rates, Economy, Pound Dollar Exchange Rate,
A surprise rise in Britain’s key unemployment rate caused the British Pound to US Dollar exchange rate to fall to a weekly low on Wednesday, but hints of hawkishness from Bank of England (BoE) policymakers in the afternoon helped the pair recover towards the end of the day.
Last week saw GBP/USD surge from 1.3827 to 1.4027 and even briefly touch a high of 1.4141. So far this week the pair has slipped. While GBP/USD briefly touched a low of 1.3912 on Wednesday, the pair spent most of the day trending nearer the level of 1.3975.
Sterling saw fluctuations throughout the day, as investors sold it on disappointing UK job data before buying it back later in the day thanks to hawkish comments from Bank of England (BoE) officials.
Wednesday saw the publication of Britain’s job market results from the three months into December. While wage data was solid, with average earnings excluding bonus coming in at a better than expected 2.5%, other parts of the report were concerning.
In particular, Pound investors were concerned by news that Britain’s unemployment rate had unexpectedly risen. The figure was expected to remain at 4.3% but instead worsened to 4.4%.
The employment change figure was expected to come in at 173k, but instead only reached 88k.
The report marked the first time in almost two years that Britain’s unemployment rate had risen, and it was the worst rise in almost five years.
As concerns about Britain’s economic outlook worsened again, market bets of a May interest rate hike from the Bank of England (BoE) were dampened.
However, later in the day BoE interest rate hike bets rose again as BoE policymakers testified to the UK Treasury Committee.
BoE policymaker Andy Haldane noted that interest rates may need to rise faster than the bank predicts, while BoE Governor Mark Carney predicted that UK wages were firming.
This helped the Pound to US Dollar exchange rate recover from its weekly lows, but the pair still remained lower on the day, partially thanks to a stronger US Dollar.
Demand for the US Dollar has been stronger since last Friday, when the currency rebounded from a three-year-low against its rival, the Euro (EUR).
On Wednesday, the US Dollar saw a boost in support as the latest US data was generally optimistic.
Markit’s February US PMI projections came in above expectations and came in at a solid 55.9 in manufacturing, services and composite prints.
However, the currency’s gains were limited as investors anticipated the evening’s Federal Reserve meeting minutes.
The Federal Reserve’s latest meeting minutes report will be published on Wednesday evening and could influence the Pound to US Dollar exchange rate through Thursday morning.
Investors will be looking for any views the bank offers on the possibility of US fiscal stimulus or deficit, particularly any risks of overheating in the US economy.
If the Fed remains optimistic about the US economic outlook, GBP/USD could remain low. Concerns about fiscal policy could make the US Dollar unappealing instead.
Thursday will see the publication of Britain’s second Q4 2017 Gross Domestic Product (GDP) projections, which are likely to be influential to Pound trade.
UK growth is forecast to have accelerated from 0.4% to 0.5% quarter-on-quarter, but slowed from 1.7% to 1.5% year-on-year.
Thursday will also see US jobless data published, as well as multiple speeches from Federal Reserve officials which could influence USD trade.
Last week saw GBP/USD surge from 1.3827 to 1.4027 and even briefly touch a high of 1.4141. So far this week the pair has slipped. While GBP/USD briefly touched a low of 1.3912 on Wednesday, the pair spent most of the day trending nearer the level of 1.3975.
Sterling saw fluctuations throughout the day, as investors sold it on disappointing UK job data before buying it back later in the day thanks to hawkish comments from Bank of England (BoE) officials.
Wednesday saw the publication of Britain’s job market results from the three months into December. While wage data was solid, with average earnings excluding bonus coming in at a better than expected 2.5%, other parts of the report were concerning.
In particular, Pound investors were concerned by news that Britain’s unemployment rate had unexpectedly risen. The figure was expected to remain at 4.3% but instead worsened to 4.4%.
The employment change figure was expected to come in at 173k, but instead only reached 88k.
The report marked the first time in almost two years that Britain’s unemployment rate had risen, and it was the worst rise in almost five years.
As concerns about Britain’s economic outlook worsened again, market bets of a May interest rate hike from the Bank of England (BoE) were dampened.
However, later in the day BoE interest rate hike bets rose again as BoE policymakers testified to the UK Treasury Committee.
BoE policymaker Andy Haldane noted that interest rates may need to rise faster than the bank predicts, while BoE Governor Mark Carney predicted that UK wages were firming.
This helped the Pound to US Dollar exchange rate recover from its weekly lows, but the pair still remained lower on the day, partially thanks to a stronger US Dollar.
Demand for the US Dollar has been stronger since last Friday, when the currency rebounded from a three-year-low against its rival, the Euro (EUR).
On Wednesday, the US Dollar saw a boost in support as the latest US data was generally optimistic.
Markit’s February US PMI projections came in above expectations and came in at a solid 55.9 in manufacturing, services and composite prints.
However, the currency’s gains were limited as investors anticipated the evening’s Federal Reserve meeting minutes.
The Federal Reserve’s latest meeting minutes report will be published on Wednesday evening and could influence the Pound to US Dollar exchange rate through Thursday morning.
Investors will be looking for any views the bank offers on the possibility of US fiscal stimulus or deficit, particularly any risks of overheating in the US economy.
If the Fed remains optimistic about the US economic outlook, GBP/USD could remain low. Concerns about fiscal policy could make the US Dollar unappealing instead.
Thursday will see the publication of Britain’s second Q4 2017 Gross Domestic Product (GDP) projections, which are likely to be influential to Pound trade.
UK growth is forecast to have accelerated from 0.4% to 0.5% quarter-on-quarter, but slowed from 1.7% to 1.5% year-on-year.
Thursday will also see US jobless data published, as well as multiple speeches from Federal Reserve officials which could influence USD trade.
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Source: moneytransfer.co.uk