UK Services PMI Falls Short on Sending British Pound to Dollar (GBP/USD) Exchange Rate Trending Higher
'Cable' remained trending in the region of 1.55 on Friday as investors focused on the situation in Greece and drove the US Dollar higher thanks to its safe-haven attributes. The GBP to USD currency pair could extend declines today if the US ISM Non-Manufacturing measure shows the forecast improvement. However, a below-estimate result would weigh on the 'Greenback' ahead of the publication of minutes from the latest FOMC policy meeting.
Earlier...
Although the Pound Sterling to US Dollar (GBP/USD) exchange rate did move away from the two week low struck earlier in the week after the US Non-Farm Payrolls report showed a surprising decline in US average earnings, the pairing failed to rally in response to an encouraging UK Services PMI.
A quick foreign exchange market summary before we bring you the rest of the report:
On Thursday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.859
The pound conversion rate (against euro) is quoted at 1.164 EUR/GBP.
At time of writing the pound to canadian dollar exchange rate is quoted at 1.707.
At time of writing the pound to australian dollar exchange rate is quoted at 1.916.
The pound conversion rate (against us dollar) is quoted at 1.247 USD/GBP.
Please note: the FX rates above, updated 25th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
’Cable’ Moves from Two-Week Low, UK Services Data Supports BoE Rate Speculation & Pound Sterling (GBP) Exchange Rate
After the Bank of England’s chief economist intimated that UK borrowing costs are as likely to fall as rise, the Pound Sterling to US Dollar (GBP/USD) exchange rate dropped from a high of 1.5781 and the pairing’s downtrend continued thanks to disappointing UK Manufacturing data and better-than-forecast US Construction Spending numbers. That being said, the Pound was able recover from the week’s low of 1.5568 in response to the US NFP report.
US markets were closed on Friday due to the Independence Day celebrations so US Dollar movement was muted. Although the UK’s Services PMI climbed from a five month low in June, and beat forecasts, the GBP/USD exchange rate actually shed 0.2% on the day’s opening levels to trend in the region of 1.5573.
Markit economist Chris Williamson pointed out several concerning elements of the Services report, stating; ‘growth will have to accelerate further in the second half of the year to meet the Bank’s 2015 growth forecasts of 2.5%, and faster growth is by no means assured. Hiring and inflows of new business both slowed in June, and an escalating Greek crisis and ‘Grexit’ has the potential to destabilise economic growth. “Growth is looking increasingly unbalanced. The recent weakness of the manufacturing PMI means industrial production looks likely to have declined in the second quarter, leaving the economy once again dependent on the service sector to sustain any growth.’
On Friday the Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.5644Currency Market Outlook and Exchange Rate Forecast: Will ‘Cable’ Climb? FOMC Policy Meeting Minutes Will Decide
The minutes from the last Federal Open Market Committee policy meeting will be published on Wednesday and could have a significant impact on Pound Sterling to US Dollar (GBP/USD) exchange rate movement over the next five days. Fed official Jerome Powell recently hinted that interest rates could be increased twice this year and if these minutes reinforce this view, the Pound is likely to fall even further away from its recent 8-month high against the US Dollar.
Prior to the meeting at which these minutes were taken the Business Insider UK commented; ‘It's a pretty safe bet that the Fed will continue to stress its "data dependence" in looking to raise interest rates. But with the market not really looking for the Fed to change course for another three months, or two Fed meetings (the Fed meets at the end of July but no press conference is scheduled), the question is whether or not we'll get a firm a signal from the Fed this far out from its first move in nine years, or whether it will be "more of the same."’
However, dovish FOMC minutes could drive the GBP/USD exchange rate to fresh highs