GBP USD Exchange Rate Volatile due to Speculation on BoE Governor Mark Carney

Modified: Monday, 31 October 2016 15:05 BST - Written by John Cameron

STORY LINK GBP USD Exchange Rate Volatile due to Speculation on BoE Governor Mark Carney

The GBP USD exchange rate exchange rate has been rocked by some major fluctuations this morning as investors question the future of Bank of England Governor Mark Carney and the impact that his early exit may have on the UK economy.

Pound (GBP) Volatile against US Dollar (USD) as Carney Future Uncertain

The Pound’s (GBP) movement against the US Dollar (USD) this morning has largely been caused by mounting speculation on whether Mark Carney will serve out his full term as BoE Governor into 2021 or leave in 2018 as he planned when he initially took up the post.

The Pound fell this morning following reports yesterday that he would stick with his plan to leave in 2018, sparking uncertainty over the impact of a change of leadership in the BoE right in the middle of ‘Brexit’ negotiations.

However ‘Cable’ quickly rose again following conflicting reports this morning that he would serve his full term to help with the UK’s split from the EU.

This volatility is likely to continue until Carney confirms his position as Kathleen Brooks, research director at City Index pointed out;

‘We need confirmation from the BOE that he is staying before we get too giddy with excitement that the “unreliable boyfriend” has finally committed to the Old Lady.’

Mr Carney had previously stated that he would make his decision by the end of 2016 but he is now predicted to make his announcement sometime this week.

US Dollar Strength Weighs on Sterling

Increasing demand for the US Dollar has prevented any major gains for the Pound today as the ‘Greenback’ is strengthened by increasing bets that the Federal Reserve will raise interest rates in December.

However the recent announcement that the FBI would be making further investigations into Democratic presidential candidate Hillary Clinton over the use of a private email server has caused the US Dollar to weaken slightly as it increases the chances of economic wildcard Donald Trump winning the US presidential elections.

GBP USD Exchange Rate Forecast: US Personal Spending Figures May Put further Pressure on the Pound

The GBP USD exchange rate may tumble later today as US personal spending data is forecast to rise. Markets predict that personal spending will see a healthy increase in September, rising from 0.0% to 0.4%, adding further support for a Fed rate hike later this year.

Meanwhile the UK saw a notable rise in mortgage approvals earlier today as data showed that approvals rose from 60.1k to 62.9k in September beating expectations of 61.5k. However the impressive figures did little to help the Pound stave off the US Dollar’s advances as investors remained focused on the potential impact of Britain leaving the EU and the likelihood of the UK Government pursuing a ‘hard Brexit’ in negotiations.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Daily Currency Updates