Exchange Rate Forecast: Pound to Dollar (GBP/USD) To Fall

Modified: Wednesday, 23 October 2013 10:01 BST - Written by Toni Johnson

STORY LINK Exchange Rate Forecast: Pound to Dollar (GBP/USD) To Fall

The GBP USD exchange rate climbed after a key US data release yesterday. However, the forward move may not continue for long.

The Pound US Dollar exchange rate (GBP/USD) is currently trading up by 0.55% at 1.6220 GBP/USD. The US Dollar Pound exchange rate is currently trading at 0.6165 USD/GBP.

The US Dollar slumped against the Pound Sterling during the latter part of yesterday afternoon’s session, sending the Pound Dollar exchange rate (GBP/USD) up into the 1.6200s just before the European equities close.

The move against the Greenback was driven by yesterday afternoon’s American employment numbers. The closely-watched Non-Farm Payrolls figure, which was delayed from the first week of this month thanks to the US government shutdown, came out well below analysts’ expectations of a 180,000 showing. The print of only 148,000 caused institutional investors to shift their funds out of the Dollar in anticipation that the US Federal Reserve will now maintain the $85bn per month which it currently allocates to its controversial Quantitative Easing Programme into next year.

Losses for the Buck are by no means guaranteed to prevail into today’s session however, as the US labour market figures were not by any means completely Dollar-negative. The US Unemployment Rate, released at the same time as the Non-Farm Payroll figure, showed that the overall level of joblessness in the States had unexpectedly dropped to 7.2% last month. The US Federal Reserve has for some time now decreed that any increase in domestic interest rates will be dependent upon a significant drop in the total level of unemployment in the world’s largest economy. When investors digest the complete picture painted by the US jobs figures, it appears likely that the kneejerk move against the Greenback will lose momentum.

Looking ahead to today’s session, this morning’s Bank of England minutes of its October policy meeting reveal that the UK’s asset purchase scheme is at an end, then expect a renewed bout of support for Sterling.

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