FED Minutes: British Pound and Japanese Yen Exchange Rates Against the US Dollar

August 16, 2016 - Written by James Fuller

STORY LINK FED Minutes: British Pound and Japanese Yen Exchange Rates Against the US Dollar

Pound Sterling (GBP) Exchange Rate Outlook Retains a Negative Bias

The POUND STERLING (currency : GBP) endured another ugly session in the markets; the UK unit dropped to levels not seen since the Summer of 2013 during afternoon trading as investors adjusted their positions ahead of this morning’s UK inflation data.

The move out of Sterling ahead of this keynote release led many analysts to suggest that ‘those in the know’ believe that this morning’s CPI data will be a ‘miss’ to the downside – a result which would hasten further monetary policy loosening from the Bank of England.

The outlook for the Pound remains NEGATIVE.

USD/GBP Currency Outlook Neutral-Positive ahead of US CPI

Elsewhere, the US DOLLAR (currency : USD) also bullied the Pound yesterday, sending the GBP USD exchange rate tumbling to an intraday low of 1.2865.

According to futures markets, there is a better than 50% implied chance that American interest rates will remain at their current banding of 25 – 50 basis points come the end of the year.

This leaves some scope for more improvement from the Buck if next month’s Federal Reserve policy announcement hints at another December rate cut Stateside – a move which would mimic last year’s policy action from the Fed.

The Greenback is forecast to trade on a NEUTRAL TO POSITIVE footing moving forward and the Pound Dollar exchange rate stands at 1.2866 GBP USD.

Japanese Growth Data Forecast to Impact to GBP JPY Exchange Rate

Meanwhile, the latest Japanese Gross Domestic Product growth numbers, published during the early hours of yesterday morning, failed to halt the recent go-ahead performance from the JAPANESE YEN (currency : JPY).

The figures, which pointed to a well below-expectations year-on-year level of growth of 0.2%, spurred talk of increased policy easing from the Bank of Japan (BoJ) for the latter part of the year, but investors still bought the Yen which is forecast to trade with a NEUTRAL TO POSITIVE bias moving forward.

The GBP JPY exchange rate sits at 130.24.

USD/JPY Exchange Rate Forecast

Scotiabank's team of analysts note the USD/JPY exchange rate's current range bound trading:

"USDJPY has yet to break the August 2 range 100.68 to 102.83."

"Momentum indicators are moderately bearish, DMI’s are in agreement, and short-term MA’s are providing confirmation."

"A downside break should see a decline toward the July 11 open at 100.43, followed by 100 and the June 24 low around 99."

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TAGS: Daily Currency Updates Dollar Pound Forecasts Japanese Yen Forecasts