Pound Sterling US Dollar Forecast GBP USD Dives after Steel Situation Worsens

March 30, 2016 - Written by Toni Johnson

STORY LINK Pound Sterling US Dollar Forecast GBP USD Dives after Steel Situation Worsens

The UK currency has been extremely undesirable today, owing to a supposedly international 'ganging up' of nations and countries against the UK's steel production.

The Pound has recorded minor gains against the 'Buck' today, thanks to poor US claims data from mid-March.

Fed Dovishness Caused Risk-On Trading

A speech from US Federal Reserve Chair Janet Yellen last night has caused a decidedly ‘risk on’ trading environment during today’s session.

The Head of America’s central bank told listeners that US economic participants would experience ‘only gradual increases’ in the short to medium term. She went on to advise that,

‘importantly, this forecast is not a plan set in stone that will be carried out regardless of economic developments,’ before going on to state that, ‘instead, monetary policy will, as always, respond to the economy’s twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals assigned to us by the Congress.’

Yellen’s comments saw global stock markets soar in anticipation of the continuation of ultra-cheap money for months to come. London’s benchmark FTSE 100 index jumped by 102.57 points to close up by 1.68%. Meanwhile the major bourses in the euroland recorded similar gains and, at the time of writing, Chicago’s broad-ranging S&P 500 index was trading up by a less impressive 0.41%.

GBP/USD Exchange Rate Climbed to a High of 1.4451 Today

The widespread shift out of US Dollar (currency : USD) denominated assets into riskier havens. The upshot saw the Pound Sterling US Dollar exchange rate climb to as high as 1.4451 GBP USD during early trading.

However, the pair has peeled back in afternoon trade this afternoon and currently changes hands at 1.4394 GBP USD. The trigger for the improvement for the Buck was provided by this afternoon’s ADP Employment Change data for March, which showed at a better than anticipated 200,000.

The figure bodes well for Friday’s Non-Farm Payrolls data, which is expected to reveal that as many as 210,000 new jobs have been generated in the non-agricultural sectors of America’s vast economy this month. For this reason, the outlook for the Greenback is now neutral to positive, with the psychologically significant 1.4000 barrier providing technical support on the GBP USD exchange rate.

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