The latest exchange rate forecast note from Lloyds confirms the British pound to dollar is headed down in the medium-term:
"Technically the whole move from the 1.4080 lows is corrective in nature, while the daily RSI’s unwind from oversold. This has now developed into a well - de fined channel, with 1.4170 the support and 1.4445/50 resistance on the day."
"Medium term the trend is still very much down and the short term correction phase is now approaching key resistance in the 1.4525/65 region."
"While below here we expect the market to come back under pressure through 1.40, with a move up through 1. 4600/50 suggesting a broader correction is actually in play. Key events for this week are BoE ’s Inflation Report on Thursday, followed by US Non - Farm payrolls on Friday."
Here are the latest fx rates for your reference:
On Friday the Pound to British Pound exchange rate (GBP/GBP) converts at 1
Today finds the pound to pound spot exchange rate priced at 1.
FX markets see the pound vs euro exchange rate converting at 1.163.
The GBP to CAD exchange rate converts at 1.703 today.
Please note: the FX rates above, updated 19th 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.
Despite worse than expected UK construction data out yesterday morning, the Pound Sterling to US Dollar (GBP/USD) exchange rate has remained close to the top end of the trading range recorded since January 14th.
After the UK manufacturing sector registered a three month high on Monday, there was disappointment from the UK construction sector data out yesterday with Markit / CIPS reporting that the purchasing managers index for the construction sector fell from a reading of 57.8 in December to 55 in January, well below expectations and the worse reading for nine months.
The Pound to US Dollar (GBPUSD) exchange rate advanced ahead of the Bank of England’s (BoE) upcoming interest rate decision despite a slowdown in construction growth.
Tim Moore, senior economist at Markit said ‘UK construction firms struggled for momentum at the start of this year, with heightened economic uncertainty acting as a brake on new orders and contributing to one of the weakest rises in output levels since the summer of 2013. Softer growth of house building activity and a more subdued increase in commercial construction were the main factors behind the slowdown.’
The Pound fell on the announcement but quickly regained its poise on the news that David Cameron seems to be making progress with his negotiations for an agreement with the European Union (EU) on the proposed conditions for the UK to remain in the EU.
Prospect of UK EU Deal Bolsters British Pound – Will the UK Vote to Stay in 2016?
Donald Tusk, European Council president confirmed in a letter to all 28 EU countries of the agreement in principle on the measures relating to the areas requested by the UK on economic governance, competitiveness and social benefits as well as the so-called sovereignty 'red card' that will allow a group of national parliaments to club together to block EU laws. This has now got to be verified by all 28 member parliaments for approval.
A recent report suggested the UK can hold its ‘in / out’ referendum as soon as 23 June to vote on its continued EU membership. A YouGov poll on Monday showed support for a so-called ‘Brexit’ from the EU has risen to its highest ever level with a total of 42% of people surveyed said they would vote for a British exit.
There were no data releases of note from the US yesterday.
Super Thursday of BoE Announcements Forecast to Trigger Notable GBP Exchange Rate Movement
Tomorrow we have ‘Super Thursday’ when we get the latest monetary policy announcements from the Bank of England on UK interest rates and the level of the Bank’s QE (Quantitative Easing) budget as well as the Bank’s latest quarterly inflation report.
Analysts will be keen to speculate on what if any inflationary pressures may be coming through the system that may hint at the timing of any interest rate rise in the UK. UK interest rates have now been stuck at their all-time record low of just 0.5% since March 2009 whilst on Friday, we will get the latest US NFP (Non-farm payroll) data, the key economic statistic of the month.
Again, analysts will be keeping a close eye on this data for clues as to when and if the US Federal Reserve may look to increase US interest rates after their historic decision in December 2015 to increase US rates, by 0.25%, the first increase in US rates since 2006.
GBP to USD Outlook
After achieving a three-week high earlier in the week, the pound vs dollar exchange rate consolidated gains ahead of the Bank of England’s trio of ‘Super Thursday’ announcements.
‘Cable’ was trending higher thanks to yesterday’s concerning US services data and the pairing could extend gains if the BoE doesn’t adopt an overly dovish approach today.
Some investors have forecast that neutral commentary from the BoE would be enough to send the Pound/US Dollar exchange rate on a new uptrend. However, the central bank is more likely to indicate that borrowing costs will remain on hold until the domestic inflation outlook improves and global headwinds ease. If it appears interest rates are likely to remain static until 2017, Sterling is likely to tumble.