Pound to Dollar TODAY - US GDP Sends GBP USD Exchange Rate Below 1.69

July 30, 2014 - Written by John Cameron

STORY LINK Pound to Dollar TODAY - US GDP Sends GBP USD Exchange Rate Below 1.69

Dollar Rate Today - During the mid-week session, a period of key risk events, the US Dollar (currency:USD) pushed ahead against both the Pound Sterling (GBP) and the euro (EUR) exchange rates.

The improvement throughout the day for the Buck was driven by this afternoon’s stunning US Gross Domestic Product data for Q2.

The most notable foreign exchange market levels are as follows (revised for end-of-week 02/08/2014):

- The pound to dollar exchange rate is 1.68218.
- The euro to dollar exchange rate is 1.34305.
- The dollar to euro exchange rate is 0.74457.
- The dollar to pound exchange rate is 0.59447.

The latest growth figures from the States revealed that the level of domestic economic activity had increased by an annualised 4.0% during the three months to the end of June – well ahead of the consensus expectation amongst analysts of a 3.0% showing.

Brian Dangerfield of RBS Securities observed that, ‘the main components of the gross domestic product numbers look quite strong. It supports the Fed’s base-case scenario that the economy is gradually improving. It’s quite positive for the Dollar. It just adds fuels to the fire.’

Dollar-watchers won’t have to wait long before the Federal Reserve announces its next move – the US central bank’s monthly policy statement comes at 1900hrs BST tonight.

It will be a major surprise if it brings anything other than a ‘hold’ decision on interest rates and another $10bn tapering of Quantitative Easing. However, this afternoon’s domestic growth figure means that Fed Chair Janet Yellen will come under sustained questioning regarding the precise timing of the Fed’s first interest rate hike in a fresh policy-tightening cycle.

Euro trades in narrow range in spite of data releases

Elsewhere, today’s economic statistics from the eurozone had a broadly neutral effect on the Euro (EUR).

This morning’s consumer confidence survey from the euroland came out slightly above expectations, printing at 102.2 versus last month’s 102.1.

However, the big figure of the day from mainland Europe came at lunchtime and it printed exactly as per expectations, revealing that Consumer Price Index inflation in Germany had dropped from 1.0% to an annualised 0.8%. The number could stoke investors’ concerns that the euro area is sliding towards deflation in the short to medium term, a fact which is likely to weigh heavily on the euro moving forward.

Meanwhile, there was further positive news from the eurozone today, with Spain’s latest GDP numbers revealing that economic growth in the Iberian economy had shown its highest quarterly increase since 2007 during the past three months.

The ahead of forecast result of 0.6% will ease some of the ongoing concerns from market participants that the eurozone’s debt crisis could once again flare up as we head towards Christmas.

Daniele Antonucci of Morgan Stanley noted earlier that, ‘the Spanish economy has recovered further. It also looks likely that it has outgrown most of its peers - from Germany to France and Italy.’

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