Pound to Dollar (GBP USD) Exchange Rate Gains Forecast, Pound to Euro (GBP EUR) Lingers Close To 16-Month High

May 7, 2014 - Written by John Cameron

STORY LINK Pound to Dollar (GBP USD) Exchange Rate Gains Forecast, Pound to Euro (GBP EUR) Lingers Close To 16-Month High

The Pound Dollar exchange rate (GBP/USD) and Pound euro exchange rate (GBP/EUR) remain well within reach of their respective near-term highs. This afternoon’s comments from Federal Reserve Chair Janet Yellen could push the Pound to Dollar rate Northwards while GBP EUR is by no means guaranteed to print a fresh high.

This afternoon’s session brought further bad news for investors holding US Dollar-denominated assets following observations from US Federal Reserve Chairperson Janet Yellen to the US Congress Joint Economic Committee. The Fed Chief stated that a ‘high degree of accommodation remained warranted’ in the States, suggesting that the US central bank may stick with its ultra-loose monetary policy stance during coming months.

Yellen’s assertion shortly after she took up her current post that American interest rates would be likely to rise as shortly as six months after the end of the Fed’s Quantitative Easing programme now appears to have been a ‘mis-speak’ and it appears likely that America’s record low lending rates will be here for at least another year. The Buck remained weak against the Pound as a consequence, sending the Sterling Dollar exchange rate up to as high as 1.6986 GBP/USD earlier on. 1.7000 appears to be providing a strong resistance level for the pair – a break followed by consecutive closes above this psychological barrier will be required in order to confirm the extant forward move for Cable.

Elsewhere, the Pound Sterling has edged higher against the New Zealand Dollar so far today, propelling the Sterling Kiwi Dollar exchange rate up to close to 1.9600 GBP/NZD. The risk-sensitive New Zealand tender has leaked support this afternoon thanks to the tone of Yellen’s words earlier on. The Fed Chair’s assertion that conditions in America’s labour market remain ‘far from satisfactory’, belies last Friday’s strong US job creation and overall unemployment figures. Economists were already questioning the figures and suggesting that the American economy has a large rump of hidden joblessness, and Yellen’s comments have provided the doubters with further evidence that all is not well with the world’s premier economy.

Meanwhile, the Pound euro exchange rate briefly broke the 1.2200 GBP/EUR threshold earlier on. The pair remains well and truly within sight of its 16-month high of 1.2258 and a move above this key level of resistance would appear highly possible in the near-term.

The latest relevant Pound Sterling, Dollar & Euro exchange rates updated 08:30 GMT 9/05/2014
- The Pound Sterling to Euro exchange rate is trading up +0.06% at 1.22404 GBP/EUR.
- The Pound Sterling to US Dollar exchange rate is trading down -0.04% at 1.69281 GBP/USD.

Last updated 08:30 09/05/2014

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