July 4, 2014
The Pound has been residing comfortably around the 1.7150 mark against the US Dollar in recent days this week, dipping to lows of 1.7135 and reaching highs of 1.7179 on Friday.
The Pound has appreciated to its pinnacle in the GBP/USD exchange rate in the latter six years, reaching highs of 1.80 this week.
However despite favourable US data the Pound seems to be able to be bullish in the GBP/USD pairing, as hype in the UK for the swift materialisation of interest rate rises resonates among economists.
Moreover, the Pound has increased for its fifth consecutive day against the Euro as speculation encourages confidence.
Forex expert, Alvin Tan, stated: ‘Over the next six-to-12 months I expect the Euro-Sterling downtrend to persist. Economic and policy divergence between the U.K and the Euro are very clear. The BoE is set to tighten before the end of the year, in our view.’
The US Dollar however attained a two week high against the Japanese Yen on Thursday following positive data releases for the US economy showing more jobs than predicted were created.
An expert in the field, David de Ferranti said: ‘While we have witnessed a spike higher for the ‘Greenback’, it remains to be seen whether the move will have any follow-through.’
With speculation mounting for the expectations regarding the US Dollar strength by the close of 2014, talks of interest rate hikes are back on the cards amongst economists for the US.
Westpac representative Richard Franulovich stated: ‘There is a sense of relief among US economy bulls after a staggering contraction in the first quarter. This number suggests current conditions are much stronger.’
Next week the US will issue Consumer Credit, Mortgage Applications, Initial Jobless Claims and Monthly Budget Statement data which could all encourage a boost for the ‘Buck’ and push the US economy confidence forward.
Meanwhile the Pound will publish Industrial and Manufacturing Production data along with GDP estimates for June on Tuesday, before Thursday sees Trade Balances and the Bank of England’s Interest Rate decision, which is forecast to remain at 0.50%; alongside the BoE Asset Purchase Target will also be published.
Next week will prove influential for both currencies; however the Pound seems steady in its trajectory whereas the US Dollar could fluctuate with another sweep of poor data, shattering optimism that it’s gained this week.