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US Dollar (USD) Exchange Rate Update – China Continues to Dominate


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More uncertainties in China and a continued tumble in global oil prices have weighed heavily on currency and equity markets across the world. Pound Sterling, the US Dollar and the Euro have all felt the effects of Chinese fears, with the stock markets posting significant losses as investors look for safer assets in which to invest their money.

The International Monetary Fund (IMF) also caused jitters when they downgraded their global growth forecast for the third time in 12 months. The US Dollar was harmed by a -0.2% reduction in the predicted growth rate, while the UK and the Eurozone forecasts remained the same.

Pound Sterling (GBP) has made heavy losses against the US Dollar (USD) and the Euro (EUR) over the past few days as the outlook for the UK’s economic future became gloomier. GBP/USD,

GBP/EUR Exchange Rates Fluctuate During Big Week for Central Bankers

The worsening global conditions have seen many central banks having to rethink their monetary policy. It had been widely expected that the Federal Reserve would continue to increase interest rates in 2016, although recent developments have caused concerns that the appropriate course of action might be to cut them back down again. Bank of England (BoE) Governor Mark Carney was typically pessimistic regarding the current climate and has pushed back predictions of a UK interest rate hike until 2017.

The Pound Sterling to US Dollar (GBP/USD) exchange rate has trended between 1.4132 and 1.4436 during the past seven days.

The Euro has been able to make gains thanks to data which showed that the German economy performed as expected during 2015 and a survey which showed sentiment among economists regarding business conditions hadn’t fallen by as much as feared. The stock markets managed to resist the weakening effects of large stock sell-offs in China over several days, while the prospect of the European Central Bank (ECB) having to act to help boost the economy further has helped improve investor confidence.

The Pound Sterling to Euro (GBP/EUR) exchange rate has traded between 1.2900 and 1.3286 during the past seven days, while the US Dollar to Euro exchange rate (USD/EUR) has trended between 0.9110 and 0.9223.

So, what’s likely to happen in the week ahead?

European Central Bank (ECB) President Mario Draghi will speak tomorrow, which could see the Euro fall if he is particularly downbeat about the Eurozone economy. There are also several important indicators regarding the performance of the German and Eurozone manufacturing and service industries. Tomorrow also sees the release of Public Sector finance figures for the UK, which will show how George Osborne is faring at curbing the rate of UK borrowing.

A leading survey of US consumer confidence will be published on Tuesday and the Federal Open Market Committee (FOMC) will meet to decide interest rates. UK and US growth figures for 2015 as a whole are due out next week as well, on Thursday and Friday respectively.