Pound to Dollar Rate Today - GBP USD Exchange Rate Falls Sharply Ahead of UK CPI

September 14, 2014 - Written by Frank Davies

STORY LINK Pound to Dollar Rate Today - GBP USD Exchange Rate Falls Sharply Ahead of UK CPI

The British Pound to US Dollar exchange rate (GBP/USD) traded relatively sideways at end of last week, following upbeat US figures which have supported the ‘Buck’.

Thursday’s YouGov poll showed that Scottish ‘Yes’ voters for independence sank to 48% which allowed Sterling to stabilise following weeks of weakening.

Meanwhile the US economy has performed well, which is reflected in the domestic data. Favourable figures and the prospect of US rate hikes by the Federal Reserve have allowed the ‘Greenback’ to remain in a strong position against other majors.

US Data Supports Strong ‘Buck’ Exchange Rate and Increases Rate Hike Speculation

The US Dollar has seen gains from the preliminary University of Michigan Confidence figures, which have reached a healthy 84.6 in September, after economists had forecast 83.3. The data suggests that US citizens feel upbeat about the current business conditions and personal finances. September’s figure is up from August’s confirmed figure which came in at 82.5. Such favourable statistics are the strongest on record since last July, an indication that the US economic recovery is still progressing nicely. Survey Director Richard Curtin stated: ‘All of the early September gain was in the Expectations Index, while consumers judged current economic conditions slightly less favourably than in August. Although consumers anticipated a slowdown in employment growth, [they] expected the highest rate of growth in their wages in six years.’

However, although today’s figure shows promise for the US economic climate, some have stated reminders that the global progress of economic recovery is still far behind that seen before the Great Recession that devastated markets. Economist Joshua Shapiro commented: ‘Consumer confidence and sentiment indices are in a solid uptrend and are well off their recession lows, but absolute levels of these measures are still well below the highs reached before the credit bubble burst. Labour market conditions will continue to dominate the outlook for consumer spending.’

Pound Exchange Rate Stabilises as Scottish ‘No’ Vote Takes the Lead

Meanwhile, the UK saw disappointing Construction Output figures on Friday which showed stagnation in July. However Markit economist Chris Williamson has stated that the presently published figures may not be as reliable as others believe, suggesting: ‘Signals from survey and order book data suggest the construction industry has fared better than the official output data would have us believe over the summer. Upward revisions to the output data are possible. This would mean GDP [Gross Domestic Product] could get revised up, painting a more buoyant picture of the economy than previously thought and adding to the argument for interest rates to rise.’

Williamson touches on the topic of interest rates which is hot topic amongst both the UK and US economies. Both nations are in close contention to be the first to hike rates out of the seven developed nations since the Great Recession; however, at present the US appears to be producing strings of favourable figures, while the UK economic recovery momentum appears to have slowed. Furthermore the Pound has faced downward pressure from the upcoming Scottish referendum which will see Scotland vote for the prospect of independence. If Scotland votes to break away from the UK the Pound could depreciate by up to 15%. The Scottish referendum which may alter the GBP to USD exchange rate significantly is scheduled for September 18th.

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