The U.S. dollar was unable to take full advantage of the lack of data from the UK this week as GBP/USD exchange rates climbed back above $1.66 this afternoon. Following Wednesdays dip, leaving Sterling/Dollar rates at $1.6572, there was scope for the greenback to make further gains as the U.S. released some key figures in the form of PPI data and consumer confidence.
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However, as we have seen on a number of occasions over the last few months the U.S. are unable to string together a good run of data releases and todays numbers will again raise question marks over the strength of the U.S recovery.
All of today's figures failed to meet market expectations and the news had an immediate impact on the GBP/USD cross. The pound gained around half a cent against the dollar with the mid-market price climbing from $1.6588 to $1.6638 on the news, drawing clear from the one month low we witnessed earlier in the week.
Next week is sure to see further volatility for the GBP/USD pairing as the UK release its latest unemployment figures as well as the minutes from the most recent Bank of England meeting. Stateside, the U.S. Federal Reserve will announce their latest interest decision and Janet Yellen will give a press conference regarding monetary policy, which may give further clues regarding the on-going stimulus programme.
What can we expect to see for GBP/USD?
It is still extremely difficult to try and predict, the UK recovery seems to have tailed off slightly in recent weeks but with the U.S economy continuing to miss its targets it looks as though exchange will continue to sit between $1.67 and $1.65 for the foreseeable future.
There is still speculation that the dollar will strengthen when the FED wind up their QE programme but so far the $20 billion they have already cut has made little difference. Some are saying we will see rates back below $1.60 in the not so distant future but for the moment we will just have to wait and see.
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