{"id":4256,"date":"2018-01-19T00:00:00","date_gmt":"2018-01-19T05:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100316-gbp-usd-uk-lower-unemployment\/"},"modified":"2018-01-19T00:00:00","modified_gmt":"2018-01-19T05:00:00","slug":"100316-gbp-usd-uk-lower-unemployment","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100316-gbp-usd-uk-lower-unemployment\/","title":{"rendered":"Pound Climbs 1% vs Dollar Across The Week As BoE Predicts Fall In Unem"},"content":{"rendered":"<p>The US dollar weakened again on Thursday, despite encouraging comments from Federal Reserve Officials. The softer dollar boosted the pound US dollar exchange rate, which hit a high of US$1.3891. This is 50 points lower than Wednesday\u2019s high, which touched US$1.3940, the highest level since the Brexit referendum. However, the exchange rate has had a phenomenal week, climbing over 1% since Monday.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<p> 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<p> For example, it could be written: <em>1 GBP = 1.28934 USD<\/em> <\/p>\n<p> <em>Here, \u00a31 is equivalent to approximately $1.29. This specifically measures the pound\u2019s worth against the dollar. If the US dollar amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n<p> Or, if you were looking at it the other way around: <em>1 USD = 0.77786 GBP<\/em> <\/p>\n<p> <em>In this example, $1 is equivalent to approximately \u00a30.78. This measures the US 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<p>With no fresh data or news to boost the pound in the previous session, the gains were more to do with dollar weakness and momentum pushing the pound higher. The pound had a slow start to the week after data showed that inflation had slowed in the UK, to 3%. Softer inflation pushed back the odds of an interest rate hike from the Bank of England, weighing on sentiment for the pound. However, sterling recovered remarkably quickly.<\/p>\n<p>The recovery was helped by comments from Michael Saunders, a voting member of the BoE monetary policy committee who said that he expected unemployment to drop lower than 4% and wages growth would increase beyond 3%. Lower unemployment and higher wages would be beneficial for the pound.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>How does strong jobs data boost the currency? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>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<p>Today, UK retail sales will be in focus. Market participants will be keen to see whether UK consumers have continued across the festive period. The UK economy is highly dependant on the service sector, which needs the consumer to spend. However, households have been under increasing pressure as prices rose and wage growth failed to keep pace. A strong reading would reassure buyers of the pound and could send sterling higher.<\/p>\n<h2><a href=\"#dollar-lower-despite-rate-hike-probability-improving\" name=\"dollar-lower-despite-rate-hike-probability-improving\"><\/a>Dollar Lower Despite Rate Hike Probability Improving<\/h2>\n<p>The dollar continued on its downward trajectory in the previous session, despite previously conservative Federal Reserve officials sounding more aggressive towards hiking interest rates. Fed officials Evans and Kaplan have pointed to further hikes in 2018, with Kaplan saying that 3 hikes could be the base scenario, although Evans thought mid 2018 would be preferable for the first hike. Following the comments, the probability of 3 rate hikes this year, as measured by the Fed Fund rate, increased to 55%, from 48% earlier in the week.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>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<p>There is a relatively quiet end to the week on the US economic calendar. Consumer confidence released later today could provide some volatility going into the weekend.<\/p>\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\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 <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>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":"<p>The US dollar weakened again on Thursday, despite encouraging comments from Federal Reserve Officials. The softer dollar boosted the pound US dollar exchange rate, which hit a high of US$1.3891. This is 50 points lower than Wednesday\u2019s high, which touched US$1.3940, the highest level since the Brexit referendum. However, the exchange rate has had a [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4257,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1394,1398],"class_list":["post-4256","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gbp","category-usd","tag-gbp","tag-usd"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Pound Climbs 1% vs Dollar Across The Week As BoE Predicts Fall In Unem - 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\/100316-gbp-usd-uk-lower-unemployment\/\" \/>\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\\\/100316-gbp-usd-uk-lower-unemployment\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100316-gbp-usd-uk-lower-unemployment\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Pound Climbs 1% vs Dollar Across The Week As BoE Predicts Fall In Unem\",\"datePublished\":\"2018-01-19T05:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100316-gbp-usd-uk-lower-unemployment\\\/\"},\"wordCount\":856,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100316-gbp-usd-uk-lower-unemployment\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100316-gbp-usd-uk-lower-unemployment.jpg\",\"keywords\":[\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2018\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100316-gbp-usd-uk-lower-unemployment\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100316-gbp-usd-uk-lower-unemployment\\\/\",\"name\":\"Pound Climbs 1% vs Dollar Across The Week As BoE Predicts Fall In Unem - 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