British Pound Sterling on Friday 20th Sept: GBP Faces Weale Speech, forecasting PSNBX at £13.2bn this month

The British Pound Sterling (Currency:GBP) is has traded lower through the course of Friday's trading session ensuring  the continuation of this week's tumultuous trading profile. There is a degree of event risk ahead today and we will be bringing you the latest currency forecasts in the wake of recent events.

As of the latest update the latest spot market rates were:

• GBP/EUR is 0.17 pct lower than at last night's close at 1.1830.
• GBP/USD is 0.13 pct lower at 1.6011.
• GBP/AUD is unchanged at 1.6990.
• GBP/NZD is 0.21 pct lower at 1.9105.

(These are spot quotes; your bank will subtract a spread at their discretion when passing on a retail rate. Note that an independent FX specialist will actively seek to undercut your bank's rate, thereby delivering you more currency. Learn more here).

14:06: US Dollar strengthens

Could the US Dollar find redemption after a shocker of a performance this week?

The pound dollar exchange rate has in the red as comments from Fed President and FOMC voter James Bullard send the US currency higher across the board.

Kathy Lien at BK Asset Management says:

"Thanks to Bullard we don't have to wait for the Fed minutes to get a better sense of how tough the decision to maintain asset purchases this week really was.  According to Bullard, the decision was a close one because tapering "by $10 billion is not a big deal."

"In other words, the central bank felt that by reducing asset purchases by only $10 billion, the impact would be so nominal that they might as well decide to keep QE policy unchanged to give the economy its best chance of recovery for the next few months.  

"In addition to admitting the decision was a borderline call, Bullard left the door open for tapering in October.  After holding policy steady, few investors considered next month as a viable option but Bullard made it clear that they are flexible and could hold a special press conference after the October meeting if needed."

11:36: A more balanced view of GBP/USD

In light of the Swissquote view below, Luc Luyet at MIG Bank says:

"Given the increasing overbought conditions, we would be medium-term cautious on GBP/USD, as it has already
priced in a lot of positive news."

11:30: A great opportunity to buy the pound sterling

Get in there and buy pounds at the expense of the US Dollar says Peter Rosenstreich at Swissquote:

"GBPUSD has sold -off on the back of weaker than expected retail sales. Failure to damage support indicates a healthy correction and good buying opportunity. With GBPUSD comfortably in a expanded uptrend channel , thin supply zones above and momentum indicators in bullish territory. We would buy on dips with our next target 1.6343."

11:08: It's getting a bit tricky when it comes to forecasting exchange rates

Shaun Osborne at TD Securities has said he sees further US Dollar weakness through 2013. But, we can also expect Euro weakness. The difficulties of currency forecasting!

10:03: Time to short GBP

UniCredit confirm a bearish stance towards the UK currency in their latest currency update:

"Weak UK retail sales erased some of sterling’s gains, suggesting that the GBP could hardly benefit going forward from positive surprises from the real economy. Current cable and EUR-GBP values are attractive to return short GBP."

09:28: UK borrowing beats expectations (i.e less than expected)

Goodish news for the Government as the public Sector net borrowing Aug Figure released at 11.452 BN Forecast was for 12 BN.

Nevertheless, the public debt pile continues to grow.

09:07: Weale speaks today

For sterling we have Bank of England event risk ahead.

The BoE’s Weale speaks in Cambridge.

"Weale has been one of the Committee’s hawks and seems the most reluctant supporter of forward guidance. His comments should be interesting and may further underpin current expectations," say Lloyds Bank Research.  

08:50: Public sector borrowing figures ahead

Ahead of today's public sector borrowing numbers Lloyds Bank say:

"PSNBX posted its first annual deterioration in July reflecting the reduced impact of APF transfers, as the annual limit was reached, and a rise in net investment.

"August’s figures may be impacted by the inclusion of actual public sector banking group data for H1 2013, replacing current ONS estimates.

"However, we expect a modest improvement in the finances, forecasting PSNBX at £13.2bn this month. Underlying PSNBX on the year to July was £13bn lower than the same period last year. Excluding the APF transfers (and Swiss banks payment) this improvement all but disappears.

"But acceleration in economic growth takes time to show up in the finances. The more robust recovery should have a marked impact over the coming years."