FX: Dollar to Pound Exchange Rate (USD/GBP) Made its Best Weekly Exchange Rate Gain Since May 2013 Last Week

Modified: Monday, 4 August 2014 21:05 BST - Written by James Fuller

STORY LINK FX: Dollar to Pound Exchange Rate (USD/GBP) Made its Best Weekly Exchange Rate Gain Since May 2013 Last Week

The US Dollar to Pound Sterling (USD/GBP) made it best exchange rate gain since May 2013 on Friday as the UK currency was weighed upon by disappointing domestic data and as the US currency was buoyed by increased expectations that the Federal Reserve will raise interest rates.

The USD/GBP exchange rate advanced to its highest point in seven-weeks after reports released on Thursday showed that consumer confidence in the UK fell unexpectedly in July. Consumer confidence data published by the GfK showed that confidence dropped for the first time in six months and away from the highest level seen for ten years.

The USD is expressed at the following levels in today's foreign exchange markets:

- The pound to dollar exchange rate is +0.2 per cent higher at 1.68582.
- The dollar to pound exchange rate is -0.2 per cent lower at 0.59318.

Household spending was initially the driving force for the UK economic recovery but as signs that spending is slowing investors are paring bets for further Pound strength.

"The almost relentless rise of the last six months couldn't continue indefinitely, and the government will be hoping this is just a temporary setback rather than the forerunner of a wider decline in confidence," said Nick Moon, managing director of GfK NOP Social Research, in a statement.

Also dragging on the Pound was the latest report published by the Nationwide Building Society which showed that property values increased by 0.1% in July from the previous month, the figure were below economist expectations for a figure of 0.5%. The value of properties across the UK showed that property values rose by 10.6% on the year in July, below expectations for a reading of 11.3%.

Data published on Friday showed that manufacturing growth in the UK increased at its slowest pace in a year in July as a reduction in new orders and output put an end to the sectors strong run of gins.


According to Markit, its PMI fell to 55.4 in July, down from the 57.2 recorded in June. Economists were expecting a reading of 57.2. While the report suggests some loss of momentum in manufacturing, the gauge remains higher than the survey average of 51.5 and has showed expansion for 17 months.

Despite the softer data, UK manufacturing remains at historically high levels and a recent report by the Confederation of British Industry showed that factory orders were at their best level since 1995.

The US Dollar meanwhile surged against all of its major peers as the week drew to a close as positive data increased speculation that the Federal Reserve will raise interest rates. Data released on Thursday showed that 230,000 new workers entered the US workforce in July and showed that the nation’s unemployment rate remained at a near six-year low of 6.1%.

“We’ve had data confirming that the US economy is a bit stronger than what everyone previously thought, and the Fed is slowly, slowly moving toward normalising policy. The trend is for the US Dollar to move higher,” said Janu Chan, an economist at St.George bank.

As long as data continues to be positive for the US Dollar it is likely that the currency will carry on with its upward movements against its major peers into next week.

GBP/USD Update 04/08/2014

The US Dollar was softer against the Pound on Monday as investors turned their attention to Construction PMI data out of the UK. The report is forecast to show that the UK construction sector expanded in July, albeit at a slightly softer rate. The PMI is forecast to ease from June’s reading of 62.6 to 62.0.

Looking at the currency foreign exchange market levels today:

The Pound to Dollar exchange rate is trading up +0.2% at 1.68582 GBP/USD.
The Euro to Dollar exchange rate is trading down -0.05% at 1.34214 EUR/USD.
The US Dollar to Australian Dollar exchange rate is trading down -0.24% at 1.07144 USD/AUD.
The US Dollar to Canadian Dollar exchange rate is trading down -0.15% at 1.09076 USD/CAD.
The US Dollar to Swiss Franc exchange rate is trading up +0.06% at 0.90670 USD/CHF.
The US Dollar to Euro exchange rate is trading up +0.05% at 0.74508 USD/EUR.
The US Dollar to Pound Sterling exchange rate is trading down -0.2% at 0.59318 USD/GBP.
The US Dollar to Indian Rupee exchange rate is trading value +0% at 61.20500 USD/INR.
The US Dollar to Japanese Yen exchange rate is trading down -0.01% at 102.55800 USD/JPY.
The US Dollar to New Zealand Dollar exchange rate is trading down -0.17% at 1.17321 USD/NZD.

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