Pound to Dollar: Forecast for GBP USD Exchange Rate Improves

February 26, 2015 - Written by John Cameron

STORY LINK Pound to Dollar: Forecast for GBP USD Exchange Rate Improves

Yen Struggles on QE Comments

The Japanese Yen (currency:JPY) was hit by comments from a leading Bank of Japan policymaker during the overnight Asian session. The Yen took a beating in the markets following comments from Koji Ishida, suggesting that the Bank of Japan’s controversial Quantitative Easing should not make an increase in the Japanese rate of inflation as the primary aim of its policy loosening programme. He suggested, instead, that QE should be targeted at increasing economic growth. Ishida stated that, ‘the BOJ is pressing the accelerator to the floor now. But if inflation picks up pace, there will come a time when it will have to gradually take its foot off the accelerator’.

GBP JPY Exchange Rate Jumps

The Pound Sterling Japanese Yen exchange rate climbed to as high as 185.03 in the aftermath of Ishida’s statement before peeling back to touch 184.11 a short time ago. However, commentators forecast that there could be further gains to come for the pair if any Japanese data suggests that the nascent economic improvement in Asia’s second economy is faltering.

US Dollar Forecast to Make a Comeback

Elsewhere, the US Dollar (currency:USD) made a tentative recovery against the Pound during this afternoon’s session. Although the latest US inflation figures once again showed a year-on-year pace of price rises of below zero, firmly taking the pressure off the US Federal Reserve to countenance any increase in interest rates any time soon. However, the news barely registered as a surprise with investors and the market instead focussed on the significantly better than anticipated domestic Durable Goods Orders data. The number were expected to show that the number of orders for products expected to last over three years had increased by 1.6% last month – the actual print came in at a heady 2.8% and the Buck climbed against the other major global currencies as a consequence.

The move saw the euro to Dollar exchange rate drop back into the 1.1100 EUR USD and the attendant relative weakening of the euro ensured that the Pound Sterling euro exchange rate jumped to a fresh 7 ½ year high of 1.3762 GBP EUR as a consequence.

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