US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),

Will The US Dollar Continue To Be Strong And To Keep Growing Or Maybe Situation Will Be Reversed

Summary:

  • The US Dollar made intraday gains on Wednesday.
  • Markets awaiting BOE policy decision.
  • GBP/AUD attempting recovery.

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USD supported by US ISM data

The market is reflecting bearish signals for this currency pair. After the Institute for Supply Management (ISM) Services PMI defied market expectations by increasing for the month of July in contrast to the alternative barometer compiled by S&P Global, the U.S. Dollar recovered earlier losses to make intraday gains over various other major currencies. The sharp increases in new orders and overall business activity within the biggest and most significant sector of the U.S. economy's largest and most important sector led to Wednesday's release of the ISM services sector index rising from 55.3 to 56.7 for last month, surprising the currency and bond markets. The Fed will decide in September whether to lower the size of the increments in which it is raising U.S. interest rates. Chairman Jerome Powell indicated last Wednesday that they would take a range of economic indicators into account, causing a significant decline in the value of the dollar.US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),  - 1 EUR/USD Price Chart

BoE Policy rate decision due

The market is reflecting mixed signals for this currency pair. The Pound sterling has strengthened ahead of the Bank of England (BoE) interest rate decision. Following the Bank of England report on Thursday, Barclays' foreign exchange analysts predict that the British Pound would likely decline; however, Goldman Sachs is more optimistic about the UK currency's prospects, particularly when compared to the Euro. Before announcing its most recent inflation and economic growth projections, the Monetary Policy Committee of the Bank of England is anticipated to announce another interest rate increase.Through the later part of July and the beginning of August, the Pound strengthened against both the Euro and the U.S. Dollar. The main test for the currency will be the size of the hike announced and the nature of those expectations.

US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),  - 2 EUR/GBP Price Chart

GBP/AUD attempting recovery

The GBP/AUD currency pair is attempting recovery of the declines experienced in July. In the first few days of August, the Pound to Australian Dollar exchange rate further reversed its July decline, but it may find it difficult to move much further than the nearby 1.76 level in the absence of further support from the Bank of England (BoE) this Thursday. Following the latest Reserve Bank of Australia (RBA) monetary policy announcement on Tuesday, which helped push GBP/AUD to one-month highs, the Australian Dollar was one of the major currencies that underperformed for the week ending on Wednesday.

US ISM Data Defied Market Expectations (EUR/USD), GBP Strengthened Ahead of BOE Policy Decision (EUR/GBP, GBP/AUD),  - 3 GBP/AUD Price Chart

Sources: finance.yahoo.com, dailyfx.com, poundtserlinglive.com

Will The US Dollar Continue To Be Strong And To Keep Growing Or Maybe Situation Will Be Reversed

Rebecca Duthie

Remote Editor and writer Intern
FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.