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Pound US Dollar Exchange Rate Struggles to Recover from One-Year Low

Last week’s high: $1.2813

Last week’s low: $1.2671

Risk Aversion Fails to Keep US Dollar on Bullish Trend

Worries over the Turkish financial crisis continued to offer the US Dollar support last week, even though the situation showed signs of stabilising.

However, the mixed nature of the latest US data soon saw USD exchange rates coming under pressure.

A sharp dip in the Philadelphia Fed business outlook index put pressure on the US Dollar, with the measure slumping from 25.7 to 11.9 in August to fall significantly short of forecast.

Even so, the GBP/USD exchange rate remained under pressure thanks to a combination of higher inflation and weaker average weekly earnings.

USD Outlook: Volatility Likely on Fed Minutes

The release of the Federal Open Market Committee’s meeting minutes on Wednesday is likely to provoke fresh volatility for the GBP/USD exchange rate.

If Fed policymakers maintained a more hawkish outlook on monetary policy this is likely to boost bets that the central bank will continue to raise interest rates.

More disappointing US data could expose to US Dollar to downside pressure, though, as confidence in the underlying health of the world’s largest economy deteriorates.

The appeal of the Pound, meanwhile, may remain muted unless the latest UK public sector net borrowing figure proves encouraging.

Key Events

21st August

09:30   UK Public Sector Net Borrowing

22nd August

19:00   Federal Open Market Committee Meeting Minutes

23rd August

13:30   US Jobless Claims

14:45   US Manufacturing PMI

14:45   US Services PMI

24th August

13:30   US Durable Goods Orders


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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

Arron Morris
Senior Currency Broker
T: 01442 892 065

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