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British Pound to Dollar, Euro Rate Forecasts: GBP USD Rally Looks to be Stalling

August 19, 2016 - Written by Tim Boyer

Latest exchange rate studies confirm the pound dollar exchange rate looks to fall in the near-term.



According to the latest GBP/USD studies, the pair looks vulnerable to the downside.

In a note to clients, Scotiabank's Chief FX Strategist notes the key pound to dollar exchange rate levels to watch:

"The Cable rally is showing signs of stalling right around the 40-day MA (1.3142)."

"Intraday signals suggest a minor peak is in on the hourly charts and the 6-hour candle signals are turning a little heavy. We look for losses to
extend to 1.3075/80 intraday. Above 1.3170/80 is needed to revive the bull run

US Rate Hike Speculation Triggers US Dollar Exchange Rate Movement



The minutes of the most recent US Federal Reserve monetary policy meeting – published on Wednesday evening – revealed that America’s policymakers are divided on whether an increase in domestic interest rates will be required next month. The notes of last month’s get-together suggested many of the assembled rate-setters felt that, ‘economic conditions would soon warrant taking another step’. However, the overall message from the minutes was that a ‘wait and see’ approach was the most suitable. The Fed summed up its position thus,

‘members judged it appropriate to continue to leave their policy options open and maintain the flexibility to adjust the stance of policy based on incoming information.’

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GBP/USD Currency Forecast Could Depend on US Inflation Data



The memos went on to place particular emphasis on upcoming US inflation data, observing that, ‘members preferred also to wait for more evidence that inflation would rise to 2% on a sustained basis.’ The minutes were taken before this month’s US Consumer Price Index inflation data; the July edition of this keynote number showed a slight year-on-year drop to 0.8% from June’s counterpart figure of 1.0%, leaving the pace of American price rises a long way below their 2.0% target and the timing of the next Fed move firmly in the balance.

The US Dollar (currency : USD) has struggled in the currency markets in the wake of the Fed’s comments, sending the Pound Sterling US Dollar exchange rate back above the psychosocially significant 1.3000 GBP USD threshold. The pair was already on the front foot by the time the Fed issues its minutes thanks to a stronger than expected set of official UK employment data, published on Wednesday morning.

Upbeat UK Data Sends Pound Sterling (GBP) Exchange Rates Higher



The Office of National statistics figures showed that the overall level of UK joblessness unexpectedly dropped by 52,000 to 1.64m during the three months to the end of June.

Perhaps even more encouragingly, the numbers also revealed that the number of Jobless Claims during the wholly post-Brexit vote month of July, dropped by 8,600.

The Pound Sterling (currency : GBP) is forecast to record gains in the currency markets as a result.

Yesterday's exchange rates - weekend close 20/08/2016



  • The Pound Australian Dollar exchange rate close at 1.71418.
  • The Pound Canadian Dollar exchange rate close at 1.68252.
  • The Pound Euro exchange rate close at 1.15452.
  • The Pound New Zealand Dollar exchange rate close at 1.79786.
  • Pound US Dollar exchange rate close at 1.30751.

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