May 6, 2021 - Written by John Cameron
STORY LINK GBP/USD Forecast: Pound to US Dollar Exchange Rate Volatile on BoE Interest Rate Decision
The Pound to US Dollar (GBP/USD) exchange has been volatile today following the latest Bank of England (BoE) interest rate decision.
At the time of writing the GBP/USD pairing are trading at around $1.3897 as the US Dollar is supported by US jobless claims falling further than expected.
Pound Sterling (GBP) Exchange Rate Mixed on BoE Interest Rate Decision
The Pound has been mixed against the US Dollar for much of the day after the latest interest rate decision from the BoE.
The BoE chose to keep interest rates unchanged at 0.1%, however the bank chose to raise its growth forecasts for the UK, saying that the economy looks stronger than first expected in a report back in February.
Dean Turner, Economist at UBS Global Wealth Management, commented on the latest BoE decision, saying:
‘The upgrades to the growth outlook were also widely expected considering the recent Budget, but the message is still one of caution. The Bank said that clear evidence that progress is being made will be needed before they consider their next policy move. In our view, this points to the Bank keeping base rates unchanged for some time yet. This low interest rate environment will support equity markets as the UK and global economy continues to recover.’
The Pound had further been supported this morning by the latest UK services PMI which recorded the fastest growth since 2013 coming in at 61.
US Dollar (USD) Exchange Rate Supported by US Jobless Claims
The US Dollar has been supported this afternoon following the release of the latest US jobless figures which beats forecasts and fell below 500,000.
The fall to 498,000 last week is at the lowest point since the pandemic began, as two-fifths of American adults are now fully vaccinated and many states in the country reopen from restrictions.
Beth Ann Bovino, U.S. chief economist for S&P Global Ratings was cautious surrounding the latest fall however, saying:
‘Overall it looks like we’re seeing healing in the jobs market. That’s much better than just over a year ago, but that’s still double what there was pre-crisis. It would be [considered] bad in a normal recession, let’s just put it that way.’
GBP/USD Exchange Rate Forecast: US Non-Farm Payrolls in Focus
Following the better-than-expected US jobless claims, all eyes turn to tomorrows US non-farm payrolls data for April which is forecast to have increased to 950,000.
The rise would help bolster the US Dollar against many of its major rivals heading into the weekend as the country makes a rapid recovery from the coronavirus pandemic.
Pound investors will keep an eye on the latest construction PMI from the UK for April which is expected to show a sustained growth as restrictions are eased and Brexit backlogs tail off.
The GBP/USD exchange rate will continue to be driven by any further coronavirus developments over the weekend.
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TAGS: Pound Dollar Forecasts