Exchange Rates Today: UK Pound Dollar (GBP/USD) Conversion Rate Falls to 7-month low last week

September 7, 2014 - Written by Toni Johnson

STORY LINK Exchange Rates Today: UK Pound Dollar (GBP/USD) Conversion Rate Falls to 7-month low last week

Currency News UK: The Pound to Dollar exchange rate (GBP/USD) declined to its lowest conversion rate in seven months at the end of last week as sentiment towards the UK currency waned ahead of the September 18 Scottish Independence vote.

With the pro independence campaign shown to have narrowed the No campaigns lead last week investors grew spooked and the Pound weakened sharply. Confusion as to what will happen if Scotland does vote in favour of independence and on whether it will be allowed to continue to use Sterling as its currency damaged sentiment towards the currency.

Stronger than forecast Construction and Services PMI data restrained the early part of the week’s losses as they came in better than expected. Despite that, some economists said that they were concerned that the UK’s economic recovery is continuing to rely of domestic demand. With a weakening Eurozone, exports have suffered.

On Thursday, a decision by the Bank of England to leave interest rates unchanged at 0.5% and its quantitative easing programme at £375 billion per month weakened sentiment towards the Pound.

At the start of the week, the US Dollar hit a one-year high against the Euro as concerns over Ukraine and disappointing German GDP data weighed heavily upon the single currency. The ‘Greenback’ saw relatively muted trading in Monday’s session due to the US markets being shut for the Labour Day national holiday.

The US Dollar was trading close to a one year high against the Euro and was firmer against the Pound. Investors have raised their bets that the Federal Reserve will raise interest rate earlier than initially expected due to a run of positive domestic data releases. Manufacturing activity in the world’s largest economy surged last month. The ‘Greenback’ could make further gains if Wednesday’s data comes in strongly.

The US Dollar held ground against its peers as the markets awaited the release of domestic balance of trade, jobless claims and non-manufacturing PMI data. Strong figures for each sent the ‘Greenback’ higher as confidence that the world’s largest economy is recovering increased. Bets that the Federal Reserve could raise interest rates sooner than expected also increased. The ‘Greenback’ also found support after Ukraine’s President sent financial markets into turmoil after backtracking on claims that a ceasefire was in the offing.

As the week ended, the US Dollar advanced against all of its major peers following the publication of more positive economic data. Payroll processor ADP reported that its nonfarm payrolls report showed that the private sector added 204,000 jobs in August, missing expectations for jobs growth of 220,000. Investor attention then focused on the release of nonfarm payrolls data.

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