Pound to Dollar Rate Softens Today, BoE Inderef Plans & Weekly 2014/2015 GBP USD Forecasts

October 13, 2014 - Written by Minesh Chaudhari

STORY LINK Pound to Dollar Rate Softens Today, BoE Inderef Plans & Weekly 2014/2015 GBP USD Forecasts

The British Pound to Dollar exchange rate (GBP/USD) has been sliding even lower on the forex markets as political factors and fears for world growth damage Sterling.

However, the International Monetary Fund (IMF) has stated that the British economy is on track to outpace every other country within the Group of Seven (G7) developed nations – a pocket of positivity after recent weakening data.

The Pound to Dollar exchange rate (also known as Cable) has faced claims of overvaluation in recent months; however, a recent downturn in Sterling sentiment has pushed the GBP lower against other major currency peers.

Here are the most recent conversion levels today:

The Pound to US Dollar exchange rate today is converting -0.04 per cent higher at 1.60695 GBP/USD.
The Euro to Dollar exchange rate is -0.03 pct higher with a conversion rate of 1 EUR equals 1.26256 USD.
The Canadian to US Dollar exchange rate today is converting -0.03 per cent higher at 0.89259 CAD/USD.
The Aus to US Dollar exchange rate converts -0.04 per cent higher at 1 AUD is 0.86824 USD.
The NZ Dollar to US Dollar today is converting -0.05 per cent higher at 0.78109 NZD/USD.

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Political Debate Pressures British Pound Lower

Last week UK Business Secretary Vince Cable asserted that he believed the Pound was still overvalued by as much as 15%.

Cable stated: ‘Arguably the Pound is overvalued by 10-15% on a trade-weighted basis.’ However, currency experts have disagreed with the statement.

Forex strategist Jane Foley commented: ‘It’s very difficult for politicians to say the Pound is overvalued.

Sterling is much weaker against the Euro than it was going into the financial crisis, and if we look at it against the Dollar, quite frankly it’s not too different from its long-term ranges.’

This week Sterling is heading toward its largest weekly advance in the latter three months versus the ‘Greenback’, despite softening today.

Friday has also seen political party UKIP win their first seated MP, an historic event for UK politics. However, markets dislike instability and any shakeup in politics threatens the Pound’s steadiness.

Strategist Kit Juckes commented: ‘The UKIP victory is indeed a huge reminder that the general election is upon us and that uncertainty surrounding that is huge and it could be very messy.’ The next UK general election is scheduled for May 2015.

Sterling is no stranger to political events though; Friday also saw the release of minutes from the Financial Policy Committee’s (FPC) meeting that discussed the back-up measures the Bank of England had laid out for a ‘Yes’ vote from Scotland.

The recent Scottish referendum saw the Pound dive lower against other majors as uncertainty shrouded the fate of the UK.

The minutes stated that the BoE planned to announce two rounds of cheap loans without delay if Scotland had voted to leave. The BoE would have used the measures in an attempt to quell a credit drought.

During the lead-up to the referendum the BoE had iterated that they had back-up plans ready to enforce if Scotland were to break away from the UK.

The minutes read: ‘The committee had noted the possible impact of a ‘Yes’ vote on market perceptions of the United Kingdom’s creditworthiness.

If an independent Scotland were not to accept its proportionate share of the debt, the committee felt this could have modest implications for the United Kingdom’s sovereign credit rating.

The implications for the implied credit rating of an independent Scotland could have been more material.’

Pound to Dollar Exchange Rate Forecast

On Tuesday the UK will publish its Consumer Price Index.

The pace of consumer price gains is expected to slow in September on the year from 1.5% to 1.4%.

Wednesday may prove more interesting for the Pound to US Dollar exchange rate with the release of UK Unemployment Rate, Jobless Claims, Claimant Count Rate and Average Weekly Earnings stats.

If UK Unemployment rate numbers show a contraction from 6.2% to 6.1% as forecast, the Pound may enjoy some support.

Meanwhile, US Advance Retail Sales data will also be published. Economists are predicting contraction of -0.1% in September.

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TAGS: American Dollar Forecasts Dollar Pound Forecasts Pound Sterling Forecasts