Forecast: Pound to Dollar (GBP/USD) Exchange Rate Predicted Lower, Sterling Softens

Modified: Thursday, 10 July 2014 16:35 BST - Written by John Cameron

STORY LINK Forecast: Pound to Dollar (GBP/USD) Exchange Rate Predicted Lower, Sterling Softens

Forecast: Pound to Dollar (GBP/USD) Exchange Rate Predicted Lower, Sterling to Canadian Dollar to move higher - The focus of currency market participants will fall on North America this afternoon with two key risk events due.

The latest set of property market numbers from Canada lead the way at 1315hrs BST this afternoon and market expectations are not particularly high.

The June Housing Start figures are expected to show a marked decrease from May’s showing of 198,300 down to 190,000. The latest forex rates are detailed below (updated 10/07/2014)

- The pound to euro exchange rate is +0.12 per cent higher at 1.25901.
- The pound to dollar exchange rate is -0.2 per cent lower at 1.71227.
- The euro to dollar exchange rate is -0.32 per cent lower at 1.36002.
- The dollar to pound exchange rate is +0.2 per cent higher at 0.58402.

The Pound to Canadian Dollar exchange rate dropped back to as low as 1.8246 GBP/CAD yesterday afternoon as the Loonie continued to benefit from last Thursday’s go-ahead US employment numbers; however, if today’s housing numbers do indeed show at a disappointing level then expect the pair to re-trace back up towards the 1.8500 trading rates of earlier in the year.

A weak showing from the Canadian housing market data would prompt an increase in market babble regarding a potential interest rate cut from the Bank of Canadia. When you run the numbers, the performance of Canada’s commodity-driven economy bears a closer resemblance to that of the eurozone than to that of the UK and USA, so it is perhaps unsurprising that Canada’s reserve bank is still umming and ahhing about its next policy step.

The fact that the Pound Sterling (GBP) and the US Dollar (USD) are both now considered classic low-yielding reserve currencies and that the Bank of England and US Federal Reserve are countenancing a tightening of policy backs up this theory.


The next key risk event of note as far as Loonie-watchers are concerned comes on Friday in the form of last month’s Canadian unemployment figures.

The Pound to Cdn Dollar Exchange Rate to See Movement

Economists expect the key-note numbers to reveal that the overall level of joblessness in Canada remained static at 7.0% last month – anything outside this print and the Pound to Cdn Dollar (GBP CAD) level is likely to show pronounced oscillation ahead of the weekend market shutdown.

Is the US Dollar Overbought?

Meanwhile, on the other side of the border, the minutes of the latest US Federal Reserve policy meeting are due for publication at 1900hrs BST tonight.

Many analysts now feel that the US Dollar is lodged firmly in the ‘overbought’ region against many of the world’s leading currencies including the Pound Sterling.

If this evening’s notes of the July FOMC policy get-together back up investors’ expectations that the Fed’s key lending rate might be on the march Northwards once more within the year, then look for the Pound Dollar exchange rate to peel back down through the psychologically-key 1.7000 threshold once more.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Canadian Dollar Forecasts Daily Currency U Forecasts