Dollar Exchange Rate Outlook: GBP/USD Forecast Could Lower on FED Volcker Rule

Modified: Wednesday, 4 December 2013 10:19 BST - Written by Tim Boyer

STORY LINK Dollar Exchange Rate Outlook: GBP/USD Forecast Could Lower on FED Volcker Rule

Global stock markets gave up significant ground during yesterday’s session as investors shied away from risk-laden assets ahead of major data releases later today.

London’s FTSE 100 closed down by almost 1.00% whilst America’s leading indices shed around 0.50% of their value on the day, signalling a reduced level of risk appetite from institutional investors. Perhaps the single most prominent reason for yesterday’s risk aversion was the thought that tonight’s publication of the Federal Reserve’s Beige Book may provide further hints that the Federal Reserve is set to begin trimming its Quantitative Easing programme in the near term. Any such suggestions from the Fed tonight will be likely to send the Pound US Dollar exchange rate (GBP/USD) down towards its next key level heading lower at 1.6000.

The subdued levels of appetite for risk in the markets yesterday were also partly due to market whispers suggesting that the US Federal Reserve will hold meetings with other regulators on 10th December aimed at introducing the Volcker Rule into the US Financial Markets. The new would-be law, proposed by former Fed Chairman Paul Volcker, would ban investment banks from placing speculative bets on the financial markets. The outcome would be lower volumes traded in world equities markets – a development which would spell bad news for global stock indices and investor sentiment alike.

Other major talking points of note today come from Europe in the form of the latest UK Purchasing Manager Index survey of the British services sector and this morning’s whole of eurozone Gross Domestic Product figure for Q3, both due for release shortly. A poor figure is expected from the eurozone, while the UK’s combined tertiary industries have been in fine fettle during recent months, so the Pound euro exchange rate (GBP/EUR) is forecast to make further gains later.

Key Dollar Exchange Rates Today (04/12/2013 10:15GMT)

The US Dollar / Australian Dollar exchange rate is trading up +1.31% at 1.10924 USD/AUD.
The US Dollar / Canadian Dollar exchange rate is trading up +0.32% at 1.06741 USD/CAD.
The US Dollar / Euro exchange rate is trading up +0.01% at 0.73579 USD/EUR.
The US Dollar / Pound Sterling exchange rate is trading up +0.18% at 0.61128 USD/GBP.
The US Dollar / Indian Rupee exchange rate is trading down -0.16% at 62.28800 USD/INR.
The US Dollar / New Zealand Dollar exchange rate is trading up +0.66% at 1.22181 USD/NZD.

The US Dollar / South African Rand exchange rate is trading up +0.6% at 10.39555 USD/ZAR.

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