UK Data Sends Pound To Dollar Exchange Rate Lower; Sterling To Euro Rate Trends Lower Today

Published: 20 Oct 2017 21:23 Forex

pound to euro and dollar exchange rate today
The British Pound Sterling (GBP) traded lower yesterday against the US Dollar (USD) and Euro (EUR) exchange rates. Today's exchange rates sees the GBP/.EUR and GBP/USD holding steady, marginally higher than the day's open.

Wednesday saw the Pound Dollar exchange rate along with the Sterling Euro pair strengthened following the release of the Bank of England’s (BoE) meeting minutes which showed a split vote for the decision to keep interest rates at historical lows.

The US Dollar (USD) however was able to counteract some of the gains made by Sterling on the release of the US meeting minutes on Wednesday evening.

Let's look at the current forex market levels today:

- The pound to australian dollar exchange rate is +0.19 per cent higher at 1.79095.

- The pound to euro exchange rate is +0.42 per cent higher at 1.25295 GBP EUR.

- The pound to dollar exchange rate is +0.17 per cent higher at 1.66475 GBP USD.

- The euro to pound exchange rate is -0.42 per cent lower at 0.79812.

- The euro to dollar exchange rate is -0.26 per cent lower at 1.32867.

The big question in the currency market today (which will affect the future of the Pound Sterling) remains; with a split vote in the BoE camp, will the Federal Reserve break their unanimous voting stance with regards to rate hikes?

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Pound Sterling surges as markets react to split vote

The Pound Sterling is forecast to see substantial gains following the latest Bank of England meeting minutes, signalling that Monetary Policy Members (MPC) are feeling a change in the UK economy.

With today signalling the first vote for interest rate hikes that has not been unanimous since 2011, the Pound is likely to place itself in a prime position to rise in the currency market; provided it can gain enough support from the Bank of England.

Today the minutes stated: ‘For two members, in particular, economic circumstances were sufficient to justify an immediate rise in Bank Rate. These members noted that the continuing rapid fall in unemployment alongside survey evidence of tightening in the labour market created a prospect that wage growth would pick up.’

The minutes continued: ‘Since monetary policy, too, could be expected to operate only with a lag it was desirable to anticipate labour market pressures by raising Bank Rate in advance of them.’

With this latest revelation from the central bank that some members wish to increase rates, the Pound may be able to discount some of the poor UK economic figures published of late.

Tuesday saw the UK Consumer Price Index fall lower than anticipated to only 1.6%, bypassing economists’ forecasts of 1.8% in July, down from June’s 1.9%.

Wednesday however, is a fairly quiet day by way of UK data publications with Mortgage Applications figures expected this afternoon. Thursday however, will see Retail Sales, Public Finances and Public Sector Net Borrowing figures released which may help to encourage the Pound’s upward trajectory in the currency market.

Dollar/Euro Exchange Rate Forecast - US Federal Reserve Meeting Minutes Published 19:00 GMT

The US Dollar may be able to retain some ground lost against the Pound today with the release this evening of the Federal Reserve’s meeting minutes.

The US economy has proven successful in its expansion of late, giving the US Dollar plenty of popularity in the currency market.

However, today will see the release of the Federal Reserve’s meeting minutes which may be able to bolster the Pound if the Federal Reserve proves to be dovish in their tone. Furthermore, what may prove more influential for the GBP to USD exchange rate is the Jackson Hole meeting scheduled for Friday, which will give a more up to date version of events from the Federal Reserve than the minutes which will be reflecting previous outlooks for monetary policy. Economist Jeff Greenberg stated: ‘The FOMC minutes are telling us about what happened three weeks ago, and Jackson Hole, given its precedent for signalling meaningful policy shifts , has taken on this very elevated status: it gets that extra attention even if it is just an academic conference.’

From here the Pound to Dollar (GBP/USD exchange rate will remain prone to fluctuations dependent on the statements from the Federal Reserve in the latter half of this week, however; the Pound looks to be in a strong position in the currency market for the mean time, thanks to the prospect of interest rate hikes becoming clearer on the horizon.

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