GBP to USD Exchange Rate Edges Higher, GBP CAD Forecast Negative

Modified: Friday, 19 July 2013 10:00 BST - Written by John Cameron

STORY LINK GBP to USD Exchange Rate Edges Higher, GBP CAD Forecast Negative

Yesterday’s afternoon session in the global currency markets brought the release of another set of apparently positive set of American jobs data. This time it was the latest weekly US Initial Jobless Claims figure which triggered optimism amongst investors holding Dollar-denominated assets. The figure showed that the number of claimants of unemployment benefit had dropped from the 358,000 of the week before down to 334,000 last week.

The employment market figures in the States reignited talk from analysts that the Federal Reserve may opt to taper down its Quantitative Easing programme sooner rather than later. However, Fed Chairman Ben Bernanke muddied the water regarding this issue when he continued his testimony to the US Congress yesterday afternoon. The Fed Chairman stated that it is difficult to accurately measure the efficacy of his Bank’s ongoing asset purchase scheme leading some market participants to ask that if this is the case, then what was the point of QE in the first place?

The Pound to US Dollar exchange rate (currency : GBP USD) saw some volatility during yesterday’s session as investors factored-in differing perspectives on the future prospects of the Fed’s QE scheme. The move on the day for Cable was generally to the upside – GBP USD hit its intraday low of 1.5154 during early trading and broke above the 1.5200 threshold just before the European equities session ended.

Looking ahead to today’s session, the most notable data release of the day comes in the form of last month’s Canadian CPI Inflation data, due for publication at 1330hrs BST. The Canadian price rise data has the potential to be market-moving as analysts are expecting the numbers to show a pronounced increase from May’s annualised figure of 0.7% to 1.3% last month. Anything above the 1.3% would see the CAD well-supported thanks to the positive effect it would have on investors’ future expectations regarding Canadian interest rates.

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