FX: Pound to Dollar 2014 - Further GBP USD Exchange Rate Losses Forecast

August 1, 2014 - Written by John Cameron

STORY LINK FX: Pound to Dollar 2014 - Further GBP USD Exchange Rate Losses Forecast

Currency News FX News: Pound to Dollar 2014 - Further GBP USD Exchange Rate Losses Forecast - Yesterday morning’s whole of eurozone Consumer Price Index data revealed that the rate of price rises in the euro area was the single most significant data release of the day and it may well weigh down the euro (currency:EUR) moving forward.

The estimate for July’s Consumer Price Index figure printed at a below expectations 0.4% - down from June’s counterpart showing of 0.5%.

Today's foreign exchange rate levels are:

- The pound to euro exchange rate is -0.4 per cent lower at 1.25657.
- The pound to dollar exchange rate is -0.37 per cent lower at 1.68295.
- The euro to australian dollar exchange rate is +0.25 per cent higher at 1.44313.
- The euro to pound exchange rate is +0.4 per cent higher at 0.79582.
- The euro to dollar exchange rate is +0.03 per cent higher at 1.33932.

The figure revealed that the rate of regional price increases is settling well below the 1.0% threshold which the European Central Bank considers to be the ‘danger zone’ for a potential bout of deflation. Any further evidence suggesting that the euroland economy is sliding towards period of falling prices would be likely to send the Pound Sterling euro exchange rate (GBP/EUR) sharply higher.

However, there was one chink of light in an otherwise gloomy day for the single currency, with May’s eurozone unemployment data pointing to a fall in the overall level of joblessness from 11.6% down to 11.5%. The net effect of today’s data releases has seen the Pound euro exchange rate slide down to as low as 1.2587 during early trading.

Elsewhere, the US Dollar has been the best performing of the sixteen most actively traded global currencies this month as investors increase their bets that the Federal Reserve will be the first of the major global central banks to increase its interest rate.

Yesterday afternoon’s mildly disappointing US Continuing Claims and Initial Jobless Claims data were not enough to knock the Buck off its current positive trajectory, as market participants eyed today’s closely-monitored domestic labour market figures. The consensus amongst economists is that the Non-Farm Payrolls element will, for the sixth month in succession, print at above the 200,000 mark.

Such an occurrence is likely to cause speculators to increase their bets on a near-term tightening of policy from the Fed.

Marc Chandler of Brown Brothers Harriman & Co. Observed yesterday that, ‘the Dollar is at new highs - this is the move people have been waiting for.’

He went on to assert that, ‘we have stronger U.S. data, and the Fed getting closer to its mandate.’ In the short term, it appears likely that the Greenback will also hoover up safe-haven support following the midweek news that Argentina has defaulted on $1.3bn of bonds, increasing its gains.

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