Archive for April 27th, 2011

Pounds VS. US Dollar in Interest Rates Expectations

The dollar exchange rate for pound is higher by 0.215% with 1 GBP being equivalent to 1.6288 USD. Similarly, the Australian dollar exchange rate for pound is higher by 0.368% with 1 GBP equal to 1.552 AUD. On the contrary, the euro exchange rate for pound is 0.216% lower with 1 GBP equals 1.6288 USD.

According to exchange rate analyst Adam Solomon at Tor FX, the British pound is rallying towards 1.63 versus the American Dollar despite the rumors that interest rates will increase quicker than FOMC.

Ahead of the minutes of the BoE that was recently released stated that the investors are predicting the MPC to increase the borrowing amount by 75 basis points in the next 12 months. Together with this, the Fed will continue to be unwilling to give extra-lenient policy measures.

Even though the inflation in UK has declined in the recently reported monthly figures, the prices of consumer products are still twice as much as the 2% target. Most of the attention will be focused on the GDP data of the first quarter. This data will be released in the coming weeks.

A positive comeback to the growth after the reduction in the fourth quarter will signal a returning speculation about rate increases in the month of May. When this increase happens, the Pound will be affected positively. As the pound increases, its impact to other currencies is not yet determined.

The currency in UK stays unchanged versus the Euro in the latest report. This occurred after reports came out that the manufacturing in Germany unexpectedly became better last month and resulted to more rate increases in the European Central Bank.

The single currency also showed gains against currencies that yield higher like Australian Dollar and New Zealand Dollar while Asian stocks declined and lowered the demand for assets that are riskier.

Enhanced by Zemanta