{"id":3860,"date":"2017-07-14T00:00:00","date_gmt":"2017-07-14T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100174-gbp-usd-quiet-day\/"},"modified":"2017-07-14T00:00:00","modified_gmt":"2017-07-14T04:00:00","slug":"100174-gbp-usd-quiet-day","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100174-gbp-usd-quiet-day\/","title":{"rendered":"Dollar Steady Against the Pound Ahead of U.S. Retail Sales & Inflation"},"content":{"rendered":"

Thursday was a quiet day as far as economic releases were concerned for both the UK and U.S., but rhetoric from policymakers on both sides of the Atlantic more than made up for the shortfall.<\/p>\n

The pound finished Thursday 0.2% higher versus the dollar at \u20ac1.2940, close to the day\u2019s high at \u20ac1.2955. Sterling has had several sessions of gains after spending most of June and a good part of July below $1.29.<\/p>\n\n\n\n\n\n
What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n
\n

When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute. <\/p>\n

For example, it could be written: 1 GBP = 1.28934 USD<\/em> <\/p>\n

Here, \u00a31 is equivalent to approximately $1.29. This specifically measures the pound\u2019s worth against the dollar. If the U.S. dollar amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n

Or, if you were looking at it the other way around: 1 USD = 0.77786 GBP<\/em> <\/p>\n

In this example, $1 is equivalent to approximately \u00a30.78. This measures the U.S. dollar\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the dollar.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

The pound received a boost in early trading on Thursday when Bank of England (BoE) policy maker Ian McCafferty waded into the monetary policy debate in the UK. McCafferty spiced things up by saying that the BoE should begin winding down its current bond buying stimulus programme (Quantitative Easing or QE). The BoE currently holds \u00a3435 billion in government debt, the majority of which is government bonds, brought during the financial crisis using newly printed money.<\/p>\n

The unwinding of this programme is expected to push up the cost of borrowing. The BoE had previously suggested that it would not begin unwinding until interest rates were back up at 2%. This would indicate the stimulus was set to continue for some time yet given that interest rates are still only at 0.25%. His comments served to increase interest rate expectations, thus pushing the pound higher.<\/p>\n\n\n\n\n\n
Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n
Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

Today there nothing on the economic calendar for the UK meaning that news flow from the U.S. is more likely to drive movement in the pound-dollar exchange rate.<\/p>\n

<\/a>Inflation data in focus after a more upbeat speech by Yellen<\/h2>\n

Despite a strong pound, the dollar was also finding support as investors focused on Federal Chair Janet Yellen\u2019s second day of Testimonies before Congress. This time however, she stuck to a more upbeat assessment, hinting the U.S. economy was on the mend. She focused on unemployment to prove her point, dismissing low inflation as a temporary factor which will correct itself over time thanks to low unemployment.<\/p>\n\n\n\n\n\n
How does strong jobs data boost the currency? <\/th>\n<\/tr>\n<\/thead>\n
It works like this, when there is low unemployment and high job creation, the demand for workers increases. As demand for workers goes up, wages for those workers also go up. Which means the workers are now taking home more money to spend on cars, houses or in the shops. As a result, demand for goods and services also increase, pushing the prices of the good and services higher. That\u2019s also known as inflation. When inflation moves higher, central banks are more likely to raise interest rates, which then pushes the worth of the currency higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

The main release today is the U.S. inflation data, in the form of the Consumer Price Index. This could give the markets some insight as to how temporary current inflation issues are. Analysts have pencilled in an increase in inflation on a monthly basis of 0.2%.<\/p>\n

Retail sales will also be under the spotlight and a similarly weak reading is expected as a lack of spending still plagues the U.S. economy.<\/p>\n\n\n\n
\n


\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our risk warning<\/a> page for more details.<\/em><\/small><\/p>\n

This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"

Thursday was a quiet day as far as economic releases were concerned for both the UK and U.S., but rhetoric from policymakers on both sides of the Atlantic more than made up for the shortfall. The pound finished Thursday 0.2% higher versus the dollar at \u20ac1.2940, close to the day\u2019s high at \u20ac1.2955. Sterling has […]<\/p>\n","protected":false},"author":163946597,"featured_media":3861,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1394,1398],"class_list":{"0":"post-3860","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gbp","8":"category-usd","9":"tag-gbp","10":"tag-usd"},"acf":[],"yoast_head":"\nDollar Steady Against the Pound Ahead of U.S. Retail Sales & Inflation - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100174-gbp-usd-quiet-day\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100174-gbp-usd-quiet-day\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100174-gbp-usd-quiet-day\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Dollar Steady Against the Pound Ahead of U.S. Retail Sales & Inflation\",\"datePublished\":\"2017-07-14T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100174-gbp-usd-quiet-day\\\/\"},\"wordCount\":883,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100174-gbp-usd-quiet-day\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100174-gbp-usd-quiet-day.jpg\",\"keywords\":[\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2017\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100174-gbp-usd-quiet-day\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100174-gbp-usd-quiet-day\\\/\",\"name\":\"Dollar Steady Against the Pound Ahead of U.S. Retail Sales & Inflation - 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