On Hold: US Dollar Exchange Rate Falls Vs Pound And Euro As FED Disappoints

Published: 20 Oct 2017 21:24 Currency Markets Forex

pound sterling exchange rate today

Today's Pound to Dollar Exchange Rate Rises as FED Delay Interest Rate Hike

The British Pound advanced in the mid-week session, with both the GBP-EUR and GBP-USD exchange rates rallying in response to the UK's latest employment numbers.

The data surprised predictions by showing that the rate of unemployment declined and the pace of average earnings growth increased.

As the report brought forward BoE interest rate hike expectations by around three months Sterling held gains until the close of the local session. Today's UK retail sales report will be the main cause of Pound rates movement ahead of the FOMC announcement.

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 0.856

At time of writing the pound to euro exchange rate is quoted at 1.168.

At time of writing the pound to new zealand dollar exchange rate is quoted at 2.114.

The live inter-bank GBP-AUD spot rate is quoted as 1.941 today.

Today finds the pound to us dollar spot exchange rate priced at 1.259.

Please note: the FX rates above, updated 28th Mar 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.

Pound to Euro Exchange Rate Slips Today

The British Pound to euro continued struggle on Tuesday, slipping back under the 1.36 GBP-EUR level, while the UK currency also lost more than a cent versus the U.S Dollar on the day.

The big moves came against the commodity-driven currencies with Sterling down almost 2% against the Australian Dollar to trade below 2.14, despite achieving highs above 2.20 last week. Recent economic data in the UK has spurred concerns that the UK economy is losing momentum with declines in services, manufacturing and consumer spending over the past month. House price gains have slowed dramatically from earlier in the year and inflation remains at zero, meaning the chances of a UK interest rate increase any time soon remains extremely unlikely. The latest inflation data released by the Office of National Statistics on Tuesday showed that the rate of inflation slipped from 0.1% to zero in August.

UK CPI at 0%, British Pound Foreign Exchange Rate Trending Lower against AUD, NZD, USD, EUR

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That means that consumer prices have been flat or below zero for the past seven months, although Bank of England officials are currently not worried that deflationary pressures are mounting. The big concern is that oil prices, and energy prices as a whole, continue to fall with the price of oil per barrel still languishing at $44 a barrel. Bank of England and government officials have been saying all year that inflation will creep back up towards the 2% target in the second half of the year and that even prompted talk of a pre-emptive rate hike at the end of 2015. Each month consumer price remain anemic and pivot between negative and positive and the longer that remains the case, the more pressure will come on the Pound. The one bright spot is that core inflation, which strips out the impact of changes in the price of energy, food, alcohol and tobacco, has been around 1-1.2% over the past month but even so the Bank of England are likely to remain very cautious when it comes to tightening monetary policy – leaving rates on hold for longer.

Forex Forecast: US CPI Predicted to Impact GBP to US Dollar Conversion Rate Today

Some analysts have pointed out that despite low headline inflation, price pressure remained in the economy and the pace of average earnings has been steadily increasing over the previous months. The data released this morning will likely show another modest increase in wage growth for the 3 months to July. The latest jobless data will also be closely watched and may show that the claimant count edged higher in August with the unemployment rate unchanged at 5.6%. The Dollar made gains against the Euro and the Pound yesterday as the latest retail sales data showed a sharp revision higher to the previous month from 0.6% to 0.9%. The latest U.S inflation data released this afternoon will likely show that consumer price gains remained flat in August, as we get ever closer to the pivotal FOMC rate announcement on Thursday evening.

Data Released 16th September

U.K 09:30 Claimant Count (August)

- ILO Unemployment (3 Months to July)

U.K 09:30 Average Earnings (3 Months to July)

- Ex Bonus

EU 10:00 Flash HICP (August)

U.S 13:30 CPI (August)

- Ex Food & Energy

U.K 14:15 MPC Members Address UK Parliament ‘Treasury Select Committee’

U.S 15:00 NAHB Homebuilders’ Sentiment (September)

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