Pound to Lira (GBP/TRY) & US Dollar (GBP/USD) Exchange Rates Spiral On Weak US Data & Egypt Fears

August 16, 2013 - Written by John Cameron

STORY LINK Pound to Lira (GBP/TRY) & US Dollar (GBP/USD) Exchange Rates Spiral On Weak US Data & Egypt Fears

The US Dollar was friendless in the currency markets yesterday as investors fretted about a brace of weak US data releases. This afternoon’s Michigan Sentiment Index will determine the relative strength of the US Dollar in the near term.

The Pound Dollar exchange rate is currently trading up 0.92% at 1.5638 GBP/USD. The Dollar Pound exchange rate is currently trading at 0.6395 USD/GBP.

The US Dollar slumped and gold struck a 2-month high during yesterday’s North American session as speculation on if/when the US Federal Reserve will begin tapering its controversial Quantitative Easing programme continued to determine the relative strength of the Greenback. A generally disappointing set of data releases from the States on the day caused market participants to trim their bets that the Fed will begin a gradual withdrawal of QE starting next month. The upshot saw the Pound US Dollar exchange rate (currency : GBP USD) jump to as high as 1.5650 during the latter part of the US equities session.

A weaker than anticipated regional manufacturing activity report, released in the States yesterday afternoon, in combination with July’s US Industrial Production data, which showed at the same level as the June edition of the figure, created a generally downbeat mood regarding the state of America’s real economy. An 11.66% intraday gain for the VIX Index, which measures the number of protective put orders which traders placing trades on the Chicago equities market, was indicative of increased levels of fear regarding the future direction of the US economy and the Fed’s monetary policy.

The US Dollar will be afforded further direction later today when August’s edition of the Michigan Sentiment Index is published. If the closely-watched sentiment gauge falls short of expectations, then it appears likely that investors will begin pricing-in a lower chance of a reduction in QE before the end of the year. Such an outcome could readily send GBP USD up towards the 1.6000 level.

Elsewhere, the Pound Turkish Lira exchange rate (currency : GBP TRY) climbed to 3.0366 yesterday as market participants shifted out of the Lira in their droves. The Turkish tender lost ground thanks to its long-standing role as a proxy currency for neighbouring currencies with a less liquid market. Widespread bloodshed in Egypt over the past 72 hrs has sent the Lira crashing through the floor and that move could be set to continue today.

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TAGS: American Dollar Forecasts Daily Currency Updates Dollar Po Forecasts