Good afternoon,
As I mentioned in yesterday's post today was fairly heavy on the data front and as a result the releases led to another choppy day for the GBP/USD cross.
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After opening today's session at $1.5637 the pound got off to a good start as French, German and Euro Manufacturing all missed target, with the news sending sterling/dollar up around a quarter of a cent. The pound was then given another boost as UK retail figures came in at 0.8% against a predicted level of 0.4%, giving the pound some much needed support following last week's inflation report.
The gains for sterling did not stop there though as this afternoon saw a number of key releases from the States. To start we had U.S. unemployment claims and core CPI figures. Unemployment claims came in 5K higher than forecast and there was no change to the CPI numbers which came in on forecast at 0.2%. The weaker figures had an immediate impact on the dollar's value and pushed GBP/USD exchange rates over $1.57 for the first time since Monday, reaching a high of $1.5731.
However, any gains for the pound were extremely short-lived as later this afternoon saw the release of the Philly FED Manufacturing index. The manufacturing sector is seen as leading indicator of overall economic health and with today's figure coming in at 40.8 against a predicted level of 18.9 the dollar was able to fight back and push exchange rates back below $1.57, settling around $1.5680 at the time of writing.
The UK and U.S. economies seem to be neck and neck at the moment and unless something drastic happens it is difficult to see rates moving massively in either direction. As I have said before I think a lot will depend on which central bank acts first in regards to interest rates but that won't be until the middle of 2015 at the earliest. As a result we may see GBP/USD rates bounce between $1.56 and $1.59 for the next few week's, reacting to the daily economic data releases just like today.
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