US Exchange Rates - Pound to Dollar Rate Analysis & GBP to USD Forecasts for 2014

July 6, 2014 - Written by Ben Hughes

STORY LINK US Exchange Rates - Pound to Dollar Rate Analysis & GBP to USD Forecasts for 2014

At the start of last week the Pound to Dollar exchange rate (GBP/USD) was maintaining its position above the 1.70 level. As Monday’s session advanced Sterling softened against a number of its most traded peers after data showed that mortgage approvals in the UK fell to an 11-month low. Losses were restrained however as the currency continued to be supported by expectations that the Bank of England will be the first major Central Bank to raise interest rates.

On Tuesday the Pound to Dollar made further advances and the Pound to Euro exchange rate also pushed higher (GBP/EUR) after it found support from the release of better-than-forecast UK manufacturing PMI data. According to the data compiled by Markit the PMI climbed to 57.5 last month, a better figure than the 56.8 expected by economists. Wednesday saw the release of a stronger than forecast Construction PMI report.

As Thursday’s session progressed the Pound shied away from the new multi-year highs it managed to achieve against the Euro and US Dollar at the start of the session as investors looked ahead to the European Central Banks policy meeting and the publication of the latest US non-farm payrolls data. The currency further softened due to a softer-than-expected Markit/CIPS UK services PMI data report.

As the week drew to a close the Pound breached the 1.26 barrier against the Euro after it found support from the weeks run of generally positive economic data reports and as data out of Germany weighed upon the already softened Euro. With no major data releases due for the UK during the session and with the US markets closed for the Independence Day holiday there was little movement in the currency’s strength.

At the start of the week the US Dollar remained close to a five-year low against the Pound and a one-month low against the Euro as investors expected that the Federal Reserve will leave interest rates on hold for a longer than expected period as the previous data releases widely disappointed investors. The ‘Greenback’ had been under heavy selling pressure after data released last month showed that the US economy contracted far more than expected in the first quarter of the year.

The US Dollar then edged away from recent lows against the Euro and Japanese Yen but remained close to a six-year low against the Pound. Further gains for the ‘Greenback’ were restrained due to persistent concerns over the outlook for the US economic recovery. Comments made by a Federal Reserve Policy maker also weighed as they underlined that the Central Bank was likely to leave interest rates close to 0% for at least another year.

Midweek the US currency tumbled to an eight-week low against the Euro as disappointing data releases showed that manufacturing output rose less than economist forecasts. It then rallied sharply from the eight-week low against a number of peers as stronger than forecast ADP jobs data increased expectations that the US economic recovery is picking up.

The currency received a further boost on Thursday as the latest non-farm payrolls report showed that unemployment in the USA dropped from 6.3% in May to 6.1% in June. The economy created 288,000 jobs, beating forecasts for a figure of 212,000.

The US Dollar experienced muted trade on Friday as the US market was closed for the July fourth Independence Day national holiday.

Dollar Exchange Rates (08/07/2014)

The US Dollar to Australian Dollar exchange rate is trading down -0.25% at 1.06444 USD/AUD.
The US Dollar to Canadian Dollar exchange rate is trading up +0.01% at 1.06847 USD/CAD.
The US Dollar to Euro exchange rate is trading up +0.09% at 0.73566 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading up +0.14% at 0.58449 USD/GBP.
The US Dollar to Rupee exchange rate is trading value +0% at 61.20500 USD/INR.
The US Dollar to New Zealand Dollar exchange rate is trading down -0.42% at 1.13841 USD/NZD.
The US Dollar to Lira exchange rate is trading down -0.06% at 2.12774 USD/TRY.
The US Dollar to Rand exchange rate is trading down -0.57% at 10.70565 USD/ZAR.

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