{"id":4615,"date":"2018-06-05T00:00:00","date_gmt":"2018-06-05T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100502-gbp-usd-cautious-bank-england\/"},"modified":"2018-06-05T00:00:00","modified_gmt":"2018-06-05T04:00:00","slug":"100502-gbp-usd-cautious-bank-england","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100502-gbp-usd-cautious-bank-england\/","title":{"rendered":"GBP\/USD: Pound Below $1.33 vs Dollar On Cautious BoE"},"content":{"rendered":"

Brexit concerns and doubts over the date of the next Bank of England (BoE) rate rise sent the pound lower on Monday. The pound US dollar exchange rate tumbled from a high of US$1.34 to a session low of $1.3295.<\/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 US 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 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

Even the construction sector remaining resilient in May was insufficient to keep the pound strong in the previous session. The UK construction sector purchasing manager\u2019s index (PMI) remained constant in May at 52.5, slightly above analysts expectations of 52. However, scratching beneath the surface of the numbers, the picture wasn\u2019t quite so rosy. News orders fell and companies were increasingly pessimistic over the outlook of the sector. As result, the pound which would normally rise on stronger than forecast data, actually declined.<\/p>\n\n\n\n\n\n
Why does strong economic data boost a country\u2019s currency? <\/th>\n<\/tr>\n<\/thead>\n
Solid economic indicators point to a strong economy. Strong economies have strong currencies because institutions look to invest in countries where growth prospects are high. These institutions require local currency to invest in the country, thus increasing demand and pushing up the money\u2019s worth. So, when a country or region has good economic news, the value of the currency tends to rise. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n

Also keeping the pound out of favour were comments from BoE monetary policy maker Tenreyro as she raised doubts over the timing of the next rate hike by the central bank. Tenreyro said that inflation had fallen quicker than what the BoE had originally anticipated and that whilst they could still be the need for a several rate hikes across the next three years, the timing of the next hike remained questionable. Investors interpreted this as a dovish stance by the central bank, with the possibility of a rate rise in August now looking dubious.<\/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 market participants will turn their attention towards the service sector pmi. Analysts are expecting that the service sector will have rebounded slight more in May, pushing up to 53 from 52.8. Brexit headlines will also be back in focus as Brexit talks begin again.<\/p>\n

<\/a>US Data Back In Focus, Traders Ignore Trade War Fears<\/h2>\n

Demand for the dollar slipped in early trade as weak data put investors off from buying into the greenback. However, demand picked up again later in the session. Investors were already contending with concerns over a global trade war after trade talks between China and the US broke down over the weekend. This set the dollar off this week on a weaker tone, which was then exaggerated by US Factory orders printing weaker than what analysts had been predicting.<\/p>\n

Data will remain in focus today as traders look towards the US ISM non-manufacturing figures. A stronger than expected reading could help the dollar with another step higher.<\/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":"

Brexit concerns and doubts over the date of the next Bank of England (BoE) rate rise sent the pound lower on Monday. The pound US dollar exchange rate tumbled from a high of US$1.34 to a session low of $1.3295. What do these figures mean? When measuring the value of a pair of currencies, one […]<\/p>\n","protected":false},"author":163946597,"featured_media":4616,"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-4615","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gbp","category-usd","tag-gbp","tag-usd"],"acf":[],"yoast_head":"\nGBP\/USD: Pound Below $1.33 vs Dollar On Cautious BoE - 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\/100502-gbp-usd-cautious-bank-england\/\" \/>\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\\\/100502-gbp-usd-cautious-bank-england\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100502-gbp-usd-cautious-bank-england\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: Pound Below $1.33 vs Dollar On Cautious BoE\",\"datePublished\":\"2018-06-05T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100502-gbp-usd-cautious-bank-england\\\/\"},\"wordCount\":829,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100502-gbp-usd-cautious-bank-england\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100502-gbp-usd-cautious-bank-england.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\\\/100502-gbp-usd-cautious-bank-england\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100502-gbp-usd-cautious-bank-england\\\/\",\"name\":\"GBP\\\/USD: Pound Below $1.33 vs Dollar On Cautious BoE - 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