Pound to Dollar Predictions: Losses Forecast for GBP/USD Exchange Rate

January 19, 2015 - Written by John Cameron

STORY LINK Pound to Dollar Predictions: Losses Forecast for GBP/USD Exchange Rate

The Swiss Franc (currency:CHF) soared during last week’s session thanks to the widely publicised decision by the Swiss National Bank to scrap the minimum floor of 1.2000 on the EUR CHF exchange rate.

The move saw the Pound Sterling to Swiss Franc exchange rate tumble by around 30% during one point on Thursday morning.

Higher than Anticipated US Inflation Data

Coverage of the fallout from the SNB’s announcement stole the headlines on Friday, but the few hours before the weekend market shutdown brought a brace of data releases from the United States which may have a bearing on price action in the global currency markets in the short term.

The latest inflation data from the US showed that the pace of domestic price rises had dropped, but not by as much as expected, during December.

Given the sharp drop in global oil prices since last summer, the data suggests that the underlying rate of American inflation remains pronounced enough for the Federal Reserve to countenance an interest rate hike during the middle part of 2015.

Strong Michigan Sentiment Index Helps US Dollar

Meanwhile, January’s Michigan Confidence Survey, published a little later on Friday afternoon, showed at a block-busting 98.2 versus analysts’ expectations of a showing of 94.1.

The figure suggests that, in spite of evidence that the global economic recovery is hitting some turbulence and fears that next week’s Greek election result may not yield a eurozone-friendly result, American economic participants are maintaining a go-ahead outlook.

Pound to Dollar Exchange Rate Forecast: GBP USD Predicted Negative

The Pound Sterling US Dollar exchange rate (GBP/USD) ended last week’s session at 1.5144.

However, analysts forecast that, with evidence mounting that the UK economic recovery is faltering and with a highly unpredictable British General Election due within four months, the Pound may underperform into the medium term.

Friday afternoon’s US economic statistic make a further improvement for the Buck more likely, so many market participants feel that the outlook for the GBP USD exchange rate is now negative.

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TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts