Gains Forecast For Pound to Dollar Exchange Rate (GBP/USD) Following Federal Reserve Minutes

April 10, 2014 - Written by Minesh Chaudhari

STORY LINK Gains Forecast For Pound to Dollar Exchange Rate (GBP/USD) Following Federal Reserve Minutes

Support for the US Dollar (currency:USD) slumped during late trading yesterday following the publication of a dovish set of minutes from the US Federal Reserve. The memos of the latest meeting of the American lender of the last resort’s policy committee brought yet another apparent alteration in stance, stating that interest rates in the States would remain ‘very low’ for a considerable time to come.

The Pound Sterling to US Dollar exchange rate is trading down -0.16% at 1.67722 GBP/USD. The US Dollar to Pound Sterling exchange rate is trading up +0.16% at 0.59623 USD/GBP.

This represented an apparent back-track from Fed Chair Janet Yellen’s most recent press conference during which she suggested that the controversial US Quantitative Easing programme would be coming to an end in the Autumn and that the Fed’s first interest rate hike since the financial crisis of 2008 broke would follow as soon as six months later. The Pound Dollar exchange rate climbed as a result of the minutes, briefly breaking the 1.6800 GBP/USD threshold as a consequence. Consecutive closes above its current multi-year high of 1.6823 would be required from the pair in order to confirm an uptrend.

The Bank of England’s latest monetary policy decision announcement at 12:00hrs BST provides the centrepiece of a busy data schedule today. In truth, the decision is almost a foregone conclusion – the almost unanimous consensus amongst analysts is that, given the highly encouraging tone of recent UK data releases, Britain’s Quantitative Easing programme will not receive any further funding, while any UK interest rate rise is at least a year away still. The remote possibility exists that the BoE will tack a ‘forward guidance’ statement onto its policy decision, but don’t hold your breath on this.

Another highlight on the day comes in the form of the weekly Initial Jobless Claims numbers in the States. If the weekly figure disappoints then the Pound US Dollar exchange rate forecast is to settle above its current range topping rate of 1.6823 GBP/USD. In such a scenario, further short-term gains would be almost guaranteed for the pair.

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