GBP/USD Forecast: Pound Dollar Exchange Rate To Hit 1.7000 GBP/USD on Disappointing US Data

Modified: Thursday, 6 March 2014 13:43 BST - Written by James Fuller

STORY LINK GBP/USD Forecast: Pound Dollar Exchange Rate To Hit 1.7000 GBP/USD on Disappointing US Data

By the middle part of yesterday’s North American equities session, the Pound Sterling had outperformed all of the other sixteen most actively traded global currencies, with the notable exception of the South African Rand. The move in favour of the Pound appeared to be counter-intuitive, given that the Bank of England announced that it had suspended a member of its staff following an investigation into the suspected rigging of spot rates in the foreign currency market.

The last thing the UK economy needs, given that it has shown continued signs of recovery during recent months, is for market participants to question the integrity of the nation’s central bank. It’s likely that we will hear more of this matter in coming months.

Elsewhere, the Bank of Canada announced during the latter part of yesterday’s European equities session, that it will be maintaining its key interest rate at its current level of 1.00%. The Canadian Dollar was well bid in the aftermath of the announcement, thanks to comments from BoC Governor Stephen Poloz, who eased his recent rhetoric regarding the risks which a potential bout of disinflation posed to his nation’s economy. The tone of Poloz’s commentary caused investors to scale back their bets on the possibility of a near-term interest rate cut from the BoC and the Pound Canadian Dollar held steady just below the 1.8500 threshold as a result GBP/CAD.

Meanwhile, a weak showing from this month’s ISM Manufacturing in the States, published at the same time as the BoC’s policy decision, ensured that the Greenback ended the day firmly on the back foot. As has been the case for some time, poor data from the American economy caused market participants to price a higher likelihood that Quantitative Easing is here to stay in the States. If tomorrow’s US Non-Farm Payrolls data for February proves to be similarly disappointing, then expect the Pound US Dollar exchange rate to push on towards the 1.7000 threshold GBP USD.

Important Pound Sterling / Dollar Exchange Rates (As of 10:30 GMT 06/03/2014)

The Pound Sterling to US Dollar exchange rate is trading up +0.06% at 1.67228 GBP/USD.
The Euro to US Dollar exchange rate is trading up +0.01% at 1.37336 EUR/USD.
The US Dollar to Euro exchange rate is trading down -0.02% at 0.72814 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading down -0.06% at 0.59799 USD/GBP.

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