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Losses Predicted for Pound Sterling US Dollar Exchange Rate GBP USD if FOMC Suggest Rate Hike

April 29, 2015 - Written by John Cameron

Another dire set of US data during today’s session has sent the Pound Sterling (currency:GBP) spiralling against the US Dollar (currency:USD).

The stand-out economic statistic from the States came in the form of the latest Gross Domestic Product numbers; the official statistics revealed that the vast American economy had expanded by a lowly year-on-year 0.2% during the first three months of this year versus an anticipated 1.0%. The quarterly figure proved to be even more disturbing for investors holding Dollar –denominated assets – aggregated US economic activity during Q1 2015 was 0.1% lower than it had been in Q4 2014. Most analysts were quick to blame the unseasonably cold weather in the States around the turn of the year as the major driver for this apparent cooling of the American financial system, however, other commentators felt that there was more to the figures than this. The Buck has climbed to its strongest level in years during the early part of 2015 and the move has hit American exporters hard. This move appears to have hit the US economy hard and fears regarding the state of the eurozone economy have added to the apparent slump in confidence stateside.

The Sterling US Dollar exchange rate started today’s session at 1.5338 GBP USD but the pair had stormed ahead to an intraday peak of 1.5489 a short time ago. The next significant level heading Northwards for the pair comes at February’s 4-month high of 1.5552 and consecutive closes above this threshold would send out a strongly positive indicator for the pair. Investors waiting for such a move may not have to wait too long; the latest Federal Reserve monetary policy announcement comes at 1900hrs BST tonight. The Fed Chair Janet Yellen ruled out an April interest rate increase at the Fed’s last get-together, but any suggestion from the US central bank that a June irate hike remains on the cards could see the Greenback stage a comeback against Sterling.
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