GBP to Dollar (USD) Exchange Rate Trends Lower Today on Weaker Than Forecast PMI

July 2, 2014 - Written by John Cameron

STORY LINK GBP to Dollar (USD) Exchange Rate Trends Lower Today on Weaker Than Forecast PMI

The best Pound Sterling exchange rates (GBP) of 2014 have slipped away against the US Dollar (USD) and Euro (EUR) currencies today as the UK services PMI came in below forecast.

The UK services sector showed a reduction in growth in June compared to that of May 2014. Markit's monthly service purchasing managers index read at 57.7, a decline of 0.9 from the previous month.

As of Thursday afternoon, the latest GBP figures show:

- The pound to euro exchange rate (GBP/EUR) is +0.07 per cent higher at 1.25785, with a 7 day range of 1.2482-1.2566
- The pound to dollar exchange rate (GBP/USD) is -0.22 per cent lower at 1.71234, with a 7 day range of 1.7028-1.7161
- The euro to dollar (EUR/USD) exchange rate is -0.29 per cent lower at 1.36133, with a 7 day range of 1.3614-1.3691

Over the years, the linkage between the price of Gold and the value of the US Dollar (currency:USD) has been proven to be a strong one, partly due to the fact that the price of the precious metal is invariably Dollar-denominated.

Both gold and the Greenback have also traditionally enjoyed strong support during periods of panic amongst market participants thanks to their long-standing status as safe haven assets.

The British pound dollar exchange rate is currently positioned 0.14 per cent higher on the day at 1.71716 GBP/USD. The Pound to euro sits at 1.25717GBP/EUR.

However, yesterday’s session in the global markets provided further evidence that the correlation between the Buck and the price of gold is beginning to de-couple.

The value of the precious metal has climbed by over 10% since Christmas as institutional investors sought out less risky options for their funds thanks to escalating tensions in Ukraine and then Iraq.

Ordinarily, investors might expect the Greenback to also enjoy sustained support during such trading conditions, however the Pound Sterling US Dollar exchange rate (GBP/USD) climbed to its highest level since October 2008, touching 1.7167 during the middle part of the North American equities session. Meanwhile, the forward price of Gold reached its highest level for three months, breaking through the psychologically-significant $1,500 per troy ounce threshold.

The price action for the Buck and the world’s favourite precious metal goes to show the extent to which the Greenback has lost its shine as the global market’s reserve currency of choice.

If investors continue to lose faith in the Dollar, then look for the GBP USD exchange rate to track Northwards towards November 2007’s multi-decade high of 2.0809. Mike Dragosits of TD Securities concurred, stating yesterday that, ‘the Dollar weakness is helping gold stay supported at the current levels.'

Today’s highlights in the global currency markets include weekly US employment data and a set piece speech from Fed Chair Janet Yellen at the IMF in Washington this afternoon.

Any suggestion from Yellen that the first interest rate hike in a new American policy tightening cycle remains a fair way off will be likely to provoke further losses for the Buck. In such a circumstance, there would appear to be little stopping the GBP USD exchange rate climbing beyond the best exchange rates seen in 2014.

Best Dollar Exchange Rates Today, 3rd June 2014

The US Dollar to Australian Dollar exchange rate is trading up +0.93% at 1.06986 USD/AUD.
The US Dollar to Canadian Dollar exchange rate is trading down -0.01% at 1.06671 USD/CAD.
The US Dollar to Swiss Franc exchange rate is trading up +0.37% at 0.89261 USD/CHF.
The US Dollar to Euro exchange rate is trading up +0.29% at 0.73458 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading up +0.22% at 0.58400 USD/GBP.
The US Dollar to Indian Rupee exchange rate is trading value +0% at 61.20500 USD/INR.
The US Dollar to Norwegian Krone exchange rate is trading up +0.84% at 6.22765 USD/NOK.
The US Dollar to New Zealand Dollar exchange rate is trading up +0.32% at 1.14457 USD/NZD.
The US Dollar to South African Rand exchange rate is trading up +0.77% at 10.83830 USD/ZAR.

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