US Dollar Forecast: Pound to Dollar Exchange Rate (GBP/USD) Predicted To Drop

February 11, 2014 - Written by David Woodsmith

STORY LINK US Dollar Forecast: Pound to Dollar Exchange Rate (GBP/USD) Predicted To Drop

On what was a quiet day for British data releases, yesterday’s session brought a couple of interesting publications in the UK. Ordinarily, figures from the Local Data Company are not closely monitored by analysts, but numbers released within the last 24hrs have revealed that vacancy rates for retail units on the UK’s High Streets have fallen to their lowest level for four years during December. The little-known stats outfit gauges occupancy levels in over 2,000 of Britain’s High Streets, so their numbers carry some credence and the fact that the volume of empty units is falling at a decent pace provides further evidence that the UK economic recovery is well and truly under way.

Elsewhere in the UK, yesterday’s Bank of Scotland Purchasing Managers’ Index survey suggested that the economic recovery in Scotland is gaining traction. The final quarter of last year saw Scotland’s economic activity levels take a step back but this month’s edition showed at its strongest level for three months. However, Scotland’s political future remains uncertain thanks to the referendum on Independence which hangs over the erstwhile Celtic nation like a sword of Damocles. BP boss Bob Dudley warned of the ‘big uncertainties’ which the potential for an independent Scotland would bring for big business as last week drew to a close. Dudley’s concerns, which centred on the currency which would be used by a Scotland which was separated from Westminster. These fears continue to weigh heavily on the Pound due to the market’s continued aversion to any form of uncertainty.

The main event for today comes in the US this afternoon when new Federal Reserve Chairwoman Janet Yellen delivers the US central bank’s latest Monetary Policy Report to the House of Representatives. Any suggestion that Yellen, as an architect of the bond buying programme, is now advocating a swift tapering of QE will be likely to add to the selling pressure on the Pound US Dollar exchange rate (GBP/USD). In such an event, trading rates back in the 1.5000s may not be far away.

Important US Dollar Exchange Rates (Updated: 12:30 GMT 11/02/2014)

The Pound Sterling to US Dollar exchange rate is trading up +0.38% at 1.64673 GBP/USD.
The Euro to US Dollar exchange rate is trading up +0.21% at 1.36749 EUR/USD.

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