Pound Dollar Exchange Rate Today - GBP USD Level As Federal Reserve Maintains QE

Modified: Thursday, 1 August 2013 09:20 BST - Written by John Cameron

STORY LINK Pound Dollar Exchange Rate Today - GBP USD Level As Federal Reserve Maintains QE

Pound Dollar Exchange Rate Today - GBP USD Level As Federal Reserve Maintains QE

The broad-ranging S&P 500’s reaction to last night’s Federal Reserve FOMC monetary policy announcement was instructive – the benchmark US share index closed down on the day by a paltry 0.01% as investors reacted to the Fed’s announcement with apathy. A large chunk of investors had been anticipating that this might be the FOMC meeting when the US central bank’s steering committee finally announced that it was ready to begin tapering its $85bn per month Asset Purchase programme. However, the Fed’s announcement that it is maintaining the monthly $85bn which it is pumping into Quantitative Easing programme on hold at least until September’s get-together came as a massive anti-climax to currency market participants. The Pound Dollar exchange rate (currency: GBP USD) was similarly nonplussed by the Fed’s announcement and in early trading today, the pair remains almost exactly where it was prior to the US central bank decision; Cable remains lodged firmly in the 1.5100s and 1 British Pound Sterling is currently changing hands for 1.5162 US Dollars.

One action of note from the Fed last night was a tweaking of its target level for overall unemployment at which it would begin increasing interest rates. Previously the golden figure was set at 6.5%, however the Fed lowered this to 6.0%. The move was taken by many analysts as a positive sign regarding the state of the real economy in the States following yesterday afternoon’s better than anticipated US GDP figure for Q2. The current overall level of unemployment in the US stands at 7.0% and given that activity in the US economy now looks to be set on a positive trajectory, this figure may well drop sharply over the remainder of the year. The fact that the Fed dropped its unemployment target from 6.5% to 6.0% yesterday may well have been a sign that it feels it was about to trigger.

Looking elsewhere, the Australian Dollar remains firmly under pressure in the currency markets in spite of the Fed’s announcement that QE is remaining at $85bn per month, for the time-being at least. Ordinarily, the news from the States would trigger support for the Aussie, but last night’s development did not stop the Pound to Australian Dollar exchange rate (GBP AUD) breaking to as high as 1.6961.

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