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Pound Sterling US Dollar GBP USD Exchange Rate Forecast Drops on Yellen Comments

November 5, 2015 - Written by John Cameron

US Dollar (USD) Strengthens against Pound and Others following Yellen Comments

The US Dollar (currency : USD) enjoyed a bout of strong support yesterday afternoon following comments from Federal Reserve Chair Janet Yellen.

The Fed Chief sent the markets into a spin by suggesting in front of US policymakers that there remains a ‘live possibility’ that interest rates Stateside will be heading higher before the end of the year.

However, Yellen tempered these words with confirmation that the US central bank’s rate-setters do not pre-judge their announcements, stating that, ‘no decision has been made on that and, what it will depend on, is the FOMC’s assessment at the time. That assessment will be informed by all of the data that we collect between now and then.’

Yellen’s comments triggered pronounced price action across the globe – futures markets, which had been pricing-in around a 30% chance of a US interest rate hike as recently as last week, were, by late yesterday, pricing in a chance of above 60% that Fed rate ‘lift-off’ will take place before Christmas.

GBP to USD Conversion Rate Dropped to Low of 1.5362 Yesterday

Meanwhile, in the currency markets, the Pound Sterling US Dollar exchange rate dropped from close to the 1.5500 threshold to a relatively lowly 1.5362 by the latter part of the American equities session.

Predictably, the high-yielding Commodity Dollars moved the other way, with the Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and the Canadian Dollar (currency : CAD) all incurring losses against the Pound.

Jeffrey Saut Predicts POund Sterling will Gain against Commodity Assets

If renowned market analyst Jeffrey Saut is to be believed, then there could be further losses to come for the Commodity Dollars. Saut embellished his reputation earlier this year by correctly calling a bottom for global equities for the final week of August.

Saut confidently forecast a market top for the next few days late yesterday, stating that his, ‘model turned negative the first week of July. It called the bottom…The model is now actually calling for a trading top this week or the first three days of next week.’

If he’s right, then there’s further gains to come for the GBP AUD, GBP NZD and GBP CAD exchange rates.

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