Foreign Currency Exchange Rate Forecast For GBP USD and GBP CAD

Published: Friday, 4 January 2013 15:00 BST - Written by Ben Hughes

STORY LINK Foreign Currency Exchange Rate Forecast For GBP USD and GBP CAD

The main event in the global currency markets this afternoon came in the US, with the release a few minutes ago of the latest American employment data. Not for the first time, the closely-watched US labour market figures proved to be a ‘curate’s egg’ – on the credit side, the numbers showed that 155,000 new jobs had been generated in the Non-Farming sectors of America’s vast economy last month. This was well ahead of analysts’ expectations of a 145,000 increase. However, the overall unemployment figure proved considerably less positive, revealing that joblessness in the States remained at 7.8% last month – economists had been anticipating a drop to 7.7%, so a maintenance of the status quo was a considerable disappointment.

The Chairman of the US Federal Reserve, Ben Bernanke, stated in his most recent post-FOMC decision press conference that the US’s ultra-loose monetary policy would remain in place until the overall level of unemployment in the States dropped to 6.5%. This afternoon’s US data reinforces the feeling that it will be many years before such a decrease in US joblessness comes to pass – there appears considerable scope for further Quantitative Easing from the Fed in the intervening period. This may keep the US Dollar under selling pressure for the foreseeable future.

The market’s instant reaction to the news from the US has been Dollar-negative. This has seen the GBP USD exchange rate (currency : GBP USD) pull away from 1.6000 and trade back up towards the 1.6050 level once more. It appears highly possible that there could be more upside to come for the pair in the short term.

Elsewhere in North America, this afternoon’s Canadian employment figures for December proved far more encouraging, with 39,800 new jobs created in the domestic economy last month and the overall level of Canadian unemployment showing a surprise drop to 7.1%. The news has sent the Pound Canadian Dollar exchange rate (currency : GBP CAD) down to 1.5810. The psychologically key 1.600 level now looks a long way away for GBP CAD.

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TAGS: American Dollar Forecasts Canadian Dollar Forecasts Currency Predict Forecasts