Pound Sterling US Dollar Exchange Rate GBP USD Fluctuates on Investor Fears

June 22, 2016 - Written by Frank Davies

STORY LINK Pound Sterling US Dollar Exchange Rate GBP USD Fluctuates on Investor Fears

The Pound has made significant fluctuations in its exchange rate against the US Dollar today, owing to mixed levels of confidence being seen among GBP investors.

The US Dollar has been an unstable option recently, and the looming EU Referendum vote promises to only amplify this unsettled nature.

Dovish Janet Yellen Speech Weighs on US Dollar Exchange Rates

The Chair of the world’s premier central bank provided a broad-ranging testimony regarding the state of the world economy yesterday afternoon and global investors sat up and took note. Janet Yellen delivered a prepared statement to the US Senate Banking Committee during yesterday’s North American equities session and she had some particularly significant comments to make regarding the possible fall-out from a decision in favour of Brexit from UK voters tomorrow.

The Fed’s head honcho warned the assembled US lawmakers that, ‘one development that could shift investor sentiment is the upcoming referendum in the United Kingdom. A U.K. vote to exit the European Union could have significant economic repercussions.’

Support for the Pound Sterling (currency : GBP) held up well during late trading yesterday, with the Pound US Dollar exchange rate jumping to its highest level since the first week of the year at 1.4767 GBP USD and leading betting exchange Betfair (PPB.L) now implies a 25% chance that Britain will vote to leave the EU.

Yellen Optimistic about the Domestic Economy but Uncertain regarding the Global Economic Outlook

However, Yellen’s concerns regarding the future performance of the global economy were not limited to the possible effects of a Brexit. She went on to assert that,

‘Of course, considerable uncertainty about the economic outlook remains. The latest readings on the labor market and the weak pace of investment illustrate one downside risk – that domestic demand might falter. In addition, although I am optimistic about the longer-run prospects for the U.S. economy, we cannot rule out the possibility expressed by some prominent economists that the slow productivity growth seen in recent years will continue into the future.'

She went on to observe that, 'vulnerabilities in the global economy also remain. Although concerns about slowing growth in China and falling commodity prices appear to have eased from earlier this year, China continues to face considerable challenges as it rebalances its economy toward domestic demand and consumption and away from export-led growth.’

Notwithstanding these downbeat comments, Yellen stated that she believes that America’s economy will avoid plunging into recession. The Buck is therefore forecast to trade on a neutral to positive footing in the near-term.

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TAGS: American Dollar Forecasts Pound Dollar Forecasts Pound Sterling Forecasts