Losses Forecast for Pound Sterling US Dollar Exchange Rate GBP USD

October 8, 2015 - Written by Frank Davies

STORY LINK Losses Forecast for Pound Sterling US Dollar Exchange Rate GBP USD

Predictable BoE Meeting Minutes Impact Pound Sterling (GBP) Exchange Rate Trading

This afternoon’s Bank of England monetary policy decision was very much a case of ‘as you were’, with only one of the nine member committee voting in favour of an interest rate hike. Once again the sole dissenter was Ian McCafferty, although the minutes which accompanied the announcement revealed that the Old Lady of Threadneedle Street’s steering committee held ‘a range of views’.

Foreign Exchange Forecast: Prospect of Lower UK Borrowing Costs Pushes GBP to EUR, USD Down

The memos observed that, ‘Ian McCafferty preferred to increase Bank Rate by 25 basis points, given his view that building domestic cost pressures were likely to come to outweigh the dampening influence of the appreciation of sterling, causing inflation to overshoot the 2% target in the medium term’. The suggestion that UK price rises will be above the government’s target sooner rather than later helped the Pound Sterling (currency : GBP), but any Sterling-positivity was kerbed by the assertion contained in the minutes that, ‘such guidance, however, is an expectation and not a promise: the path that Bank Rate will actually follow over the next few years will depend on economic circumstances.’

Pound Sterling to US Dollar Foreign Currency Outlook: 'Cable' Down from Best Rate but Holds 1.53

The Pound slid to as low as 1.3543 against the euro (currency : EUR) during the immediate aftermath of the Bank of England’s decision before settling just below the 1.3600 level. Meanwhile, the Pound Sterling US Dollar exchange rate continued to trade at slightly above the 1.5300 GBP USD level following the publication of the announcement. The near-term trajectory of the GBP USD exchange rate is forecast to be determined by the publication of the minutes of September’s Federal Reserve monetary policy meeting this afternoon. Most analysts predict that the Fed will continue to suggest that it is ‘likely’ that American interest rates will increase before the end of the year. Such an outcome would be likely to see the Pound Dollar exchange rate plunge down through the 1.5000 threshold sooner rather than later.

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TAGS: Daily Currency Updates Dollar Pound Forecasts Pound Sterli Forecasts