Exchange Rates Forecast - GBP to USD Exchange Rate Slips As World Awaits Bernanke's Jackson Hole Speech

Modified: Friday, 31 August 2012 09:04 BST - Written by Ben Hughes

STORY LINK Exchange Rates Forecast - GBP to USD Exchange Rate Slips As World Awaits Bernanke's Jackson Hole Speech

Global markets endured a twitchy afternoon yesterday, with London’s FTSE 100 ending the session down by almost half a percentage point on the day. The febrile mood was caused by investors’ concerns over the content of Ben Bernanke’s much-vaunted Jackson Hole speech which comes later today. Another semi-positive US data release yesterday afternoon, in the form of July’s US Consumer Spending data, which revealed a monthly increase of 0.4% from June’s counterpart figure, heightened concerns that Bernanke may use his speech to note the risks which remain to continued global growth, while not announcing any further stimulus for the US economy. Such an outcome would represent a ‘nightmare scenario’, sending world equities markets sharply lower and the US Dollar higher across the board.

Meanwhile, China offered some solace to down-in-the-mouth share market participants by revealing that it stands ready to step into the bond markets in order to purchase the government debts of debt-ridden eurozone states. Ordinarily, this news would have been enough to send equities higher, but yesterday’s statement had very little immediate effect. It appears that the Asian giant’s ‘offer of help’ simply served to remind market participants that Europe’s debt black hole is a long way from disappearing just yet.

Elsewhere, there was a relatively rare piece of Sterling positive news yesterday morning, with July’s UK Mortgage Approvals data showing ahead of analysts’ expectations at 47,312. This was up from June’s counterpart number of 44,124. However, it is far too early to start spotting the green shoots of recovery for the UK’s beleaguered housing sector.

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