The Pound Sterling to US Dollar (GBP/USD) and Euro to US Dollar (EUR/USD) exchange rate weakened to trade in the region of 1.53 on Wednesday as investors were left unimpressed by the lack of detail in the Queen’s speech and as the US currency remained supported by speculation that the Federal Reserve will hike interest rates this year.
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell to a session low of 1.5318
Today saw the State Opening of Parliament in the UK and the Queen’s speech, which outlined the list of laws that the government hopes to be approved by Parliament over the coming year. The speech was the first made on behalf of a majority Conservative government in 20 years, and was watched closely by the markets for signs as to when the proposed EU referendum will be held. Investors were left disappointed; however, as the Queen’s speech offered very little detail on the subject.
‘Early legislation will be introduced to provide for an in-out referendum on membership of the European Union before the end of 2017,’ Queen Elizabeth II told Parliament.
The speech was the only point of interest for the Pound on Wednesday due to a lack of market moving economic data releases.
Quiet Session for Data
The US Dollar moved higher against a number of major peers as demand for the currency remained high. Economic data released in the previous session showed that US business investment is set to increase, consumer confidence improved and house prices continued to rise. The positive data supported speculation that the Federal Reserve will begin to hike interest rates later in the year if the economy continues to improve as forecast.
Against the Japanese Yen the US Dollar surged to a fresh 8-year high after minutes released by the Bank of Japan (BoJ) showed that policy makers do not believe that inflation will hit the bank’s target rate of 2%. The comments increased the possibility that the bank will have to introduce more monetary easing measures later in the year.
The Pound was also firmer against the Japanese Yen.
The GBP/USD exchange rate will experience movement on Thursday due to the release of UK GDP second estimate reports and Home sales data out of the US. Also of interest will be UK Mortgage Approvals and US Jobless Claims reports.