FX Outlook: Pound Sterling US Dollar GBP-USD Exchange Rate Forecast to Improve Near-Term

August 4, 2015 - Written by Frank Davies

STORY LINK FX Outlook: Pound Sterling US Dollar GBP-USD Exchange Rate Forecast to Improve Near-Term

Cable Could Gain on Bullish UK Services PMI

The Pound Sterling to US Dollar exchange rate could break out of its current narrow trading range if the day's UK Services PMI surprises. A positive result would push the Pound higher against its peers while a slump would weigh on the North American currency over the course of the European session.

Earlier...

Below-Forecast US Manufacturing Data has Little Impact on GBP to USD Exchange Rate Trading

Yesterday’s North American session brought the publication of a brace of US data releases which had opposite effects on the relative value of the US Dollar (currency : USD). The July edition of the closely-monitored Institute of Supply Management (ISM) survey of America’s vast manufacturing sector printed at a below-expectations 52.7 – down from June’s showing of 53.5.

The reading of above 50.0 indicates that activity levels in this key area of the US economy continue to expand, albeit at a slower pace than was the case in mid-Summer. On a more positive note, the New Orders element of the data release revealed that the level of new business in the States had expanded from 56.0 in June to 56.5 last month. However, the all-important employment index contained in the ISM survey showed a pronounced drop from 55.5 to 52.7. This facet of the data has taken on added significance during recent months thanks to the US Federal Reserve’s repeated insistence that evidence of ‘further improvement’ in the US labour market before the first increase in interest rates since the credit crisis will take place.

US Personal Expenditure Increases, Supports USD against GBP, EUR Conversion Rates

Yesterday’s core version of the US Personal Consumption Expenditure data provided some reason for optimism for investors holding Dollar-denominated assets. Analysts had been anticipating a 1.2% increase in the rate of spending by American economic participants in the most recent month measured – June. They got a showing of 1.3% and an upward revision to May’s counterpart figure. However, investors appeared far from convinced by the US consumer spending figures and appeared more concerned by the below-par ISM Manufacturing survey instead.

Foreign Exchange Market Update: Pound Sterling to US Dollar Exchange Rate Trending at 1.56

The Pound Sterling US Dollar exchange rate was changing hands at an intraday low of 1.5566 GBP USD just before the publication of the Personal Consumption figures; by the latter part of the European equities session, the pair had broken back up to as high as 1.5624 as market participants turned against the Buck. Analysts forecast that there could be further upside to come for the Pound Sterling against the Greenback.

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