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US Dollar to Pound Sterling Weekly Exchange Rate Roundup March 23 ? 27

March 29, 2015 - Written by James Fuller

The US Dollar exchange rate had a mixed week, as expectations increased that the US Federal Reserve may choose to delay hiking interest rates until later in the year.



At the start of the week, the ‘Greenback’ was stronger against several peers, as investors still believed that the Federal Reserve would hike interest rates in the summer. The Pound weakened after a CBI Industrial Trends Orders report came in well below expectations.

On Tuesday, the Pound Sterling tumbled against the US currency and other major peers after data showed that inflation in the UK fell to a record low level of zero. The figure was the lowest seen since estimates of the measure first began in 1988. The cause for the sharp fall was tumbling oil and food prices. In contrast, the US Dollar strengthened as domestic data showed that inflation in the world’s largest economy increased.

Midweek, the US Dollar weakened against the majority of its most traded peers as investors raised their bets that the Federal Reserve will not hike interest rates until next year at the earliest. Chicago Federal Reserve President Charles Evans said in a speech that the cost of raising interest rates too soon far outweighs those of raising them too late.

The US Dollar strengthened against all of its most traded peers following the release of stronger-than-forecast jobless claims data. The U.S. Department of Labour said the number of individuals filing for initial jobless benefits in the week ending March 21 declined by 9,000 to 282,000 from the previous week’s total of 291,000. Analysts had expected initial jobless claims to fall by 1,000 to 290,000 last week. A separate report also showed that the US service sector expanded at its fastest pace since September in March. The PMI rose to 58.6 from a final reading of 57.1. Also supporting the currency were comments made by two other Federal Reserve Presidents.

As the week ended, the ‘Greenback’ continued to gain against the Pound and other major peers as Federal Reserve officials signalled that they were still on track to raise interest rates this year. Combined with the strong data releases in the preceding session the comments caused investors to continue to favour the currency.

Next week is set to be a busy one for the US Dollar due to a data packed schedule. The most important data releases will be ADP Employment change and ISM Manufacturing PMI reports.

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