GBP USD Exchange Rate Slips Below Key 1.30 Level as UK Data Fails to Impress

September 29, 2016 - Written by Ben Hughes

STORY LINK GBP USD Exchange Rate Slips Below Key 1.30 Level as UK Data Fails to Impress

The Pound to US Dollar exchange rate had been holding its ground above its worst levels for much of the week despite a lack of influential UK data to boost its appeal. However, as Thursday’s data failed to impress, some investors lost interest in the British currency.

GBP/USD began the week trending at around 1.2969 and near its worst levels in five weeks. Since then, the pair has mounted a limited recovery but was unable to hold Thursday morning’s high of 1.3051 as it slipped back below 1.30.

Pound US Dollar (GBP USD) Investors Uninspired by August Mortgage Approvals

Sterling sentiment slipped again on Thursday after the currency recovered on Tuesday and held its ground on Wednesday, as the day’s British ecostats offered little fresh optimism to investors.

In the week’s first influential UK datasets thus far, it was revealed that mortgage approvals fell to a 21-month-low of 60,058. Market consensus was that the figure would fall from 60.9k to 60.2k, but the disappointing result weighed on Sterling sentiment.

The Pound may have limited its losses thanks to news that consumer credit had improved to 1.6b in August, but ultimately the currency experienced slight falls against most rivals on Thursday morning.

Bets of further Bank of England (BoE) easing in the coming months also weighed on Sterling demand, following comments made by BoE Deputy Governor Minouche Shafik that further easing was still likely.

US Dollar (USD) Exchange Rates Strengthen as Risk-Rallies are Limited

Despite many factors benefitting the appeal of risk-correlated currencies this week, such as the perceived results of the first US Presidential debates and an increase in oil prices, market jitters have proven to be too strong for an extended risk rally.
Sentiment towards the ‘safe-haven’ US Dollar has also strengthened this week due to better moods in US markets, but the currency has also benefitted from risk-market anxiety ahead of November’s presidential election.

The ‘Greenback’ has also been boosted by this week’s economic data. Wednesday saw the publication of preliminary August durable goods orders results, which were expected to fall to -1.5% but escape contraction by scoring a stagnant 0.0%.

GBP/USD Currency Forecast: Q2 UK Gross Domestic Product Ahead

The Pound to US Dollar (GBP USD) exchange rate could still gain value over the course of this week’s trade session if Friday’s British growth figures print solidly.

Britain’s final Q2 Gross Domestic Product (GDP) scores will be published on Friday morning, and are expected to meet preliminary scores of 0.6% quarter-on-quarter and 2.2% year-on-year. If results come in as expected, Sterling will likely hold its ground and end the week near its current levels.

Better-than-expected growth would give the Pound a strong boost, potentially giving investors an excuse to mount a more solid recovery. However, worse-than-expected scores could lead to a Sterling plunge.

The US will also see the publication of various influential datasets before the end of the week. Final Q2 growth scores, as well as August goods trade balance and inventory scores will be published during Thursday’s American session, with personal income and personal spending figures following on Friday.

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TAGS: Daily Currency Updates Dollar Pound Forecasts Pound Sterli Forecasts