Tuesday, 25 August 2015

GBP/USD drops a cent

Good afternoon,

The dollar rebounded today to claw back some of the ground it lost during yesterday's turbulent session. The GBP/USD cross fell sharply after the Peoples Bank of China (PBOC) announced they would cut their one year benchmark lending rate by 25 basis points to 4.6%, giving a boost to risker assets.

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After briefly breaking through $1.58 this morning GBP/USD ended the day back below $1.57  following the announcement from China's central bank. The dollar was hit hard yesterday as stocks crashed and has left investors with little hope the U.S. Federal Reserve will increase interest rates next month.

Many within the market had bet on Janet Yellen and FOMC raising rates in September following a run of positive data for the U.S. economy. A rate hike from the Federal Reserve would have given the dollar a major boost by driving investment flows into the U.S.

However, with a rate hike now seemingly off the cards the volatility for GBP/USD is set continue. Forecasts are now suggesting the Fed will look to push back their rate hike until early 2016 while the Bank of England may not act until the third quarter of next year.

Until we hear something concrete from the UK and U.S. central banks the pound and dollar will continue to come under pressure from safe-haven currencies such as the euro and yen.

So if you have an upcoming requirement to buy or sell dollars in the coming months and want to ensure you are making the most from your transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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Monday, 24 August 2015

GBP/USD exchange rates push towards $1.58

Good afternoon,

Sterling suffered across the board today following a huge plunge in global stocks extinguished hope the Bank of England will look to raise interest rates anytime soon. The pound fell against most of its major counterparts, losing around 1.5% against the euro during today's session.

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However, it wasn't all doom and gloom for those of you looking to purchase U.S. dollars. With stocks falling any chance of a rate hike by the U.S. Federal Reserve next month all but disappeared and resulted in GBP/USD actually rising.

The currency pair rose from $1.5631 and got within touching distance of $1.58 for the first time since June, reaching a high of $1.5798.

Uncertainty sparks sell-off!

With concerns rising over the state of China's economy and the recent devaluing of the yuan investors have been selling off commodity based currencies such as the Australian and New Zealand dollars and returning to safer alternatives.

The main beneficiary of today's sell off was actually the euro, which gained over 3% against the dollar today. With all the turmoil the euro has faced this year it is hard to believe the euro is now being seen a safe-haven but just goes to show how quickly things can change in the currency markets.

Interest rate hike.....what hike?

Following today's events it seems unlikely we will see any action taken by the UK or U.S. central banks anytime soon which makes predicting the future of GBP/USD even more difficult. A couple of weeks ago everyone thought the Fed would raise rates in September which could have forced GBP/USD back towards $1.50 but now there is every chance we could see the pair rise towards $1.60 in the coming weeks.

If you have an upcoming requirement to buy or sell dollars in the coming weeks and want to ensure you are making the most from your transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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Tuesday, 18 August 2015

GBP/USD exchange rates rise to seven week high

Good afternoon,

Following this mornings positive UK inflation reading the pound was able to break through $1.57 barrier for the first time since June. The gains made by the U.S. dollar during yesterdays session were quickly swept away as the GBP/USD cross rose from $1.5564 to $1.5714 after UK inflation rose to 0.1% in July.

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The pound rose across the board as the stronger than forecast inflation data broke, it had been predicted the inflation reading would remain at 0%, having turned negative back in April.

So with this mornings positive CPI reading, plus core inflation rising to a five month high the pound was able to shake off the dollars recent gains, unfortunately it didn't last for long.

The dollar managed to claw back some of the ground as data showed U.S. housing starts rose to a near eight-year high last month. The housing starts report, along with the positive retail, industrial and job numbers we have seen over the past few weeks suggests the U.S. economy could sustain a rate hike from the Federal Reserve next month.

As I have mentioned before, a rate hike next month could have a huge impact on the GBP/USD cross. I think it is unlikely we will see the Bank of England act this year so it certainly leaves the door open for the dollar.

If the Fed decided raise rates next month we could easily see GBP/USD fall back towards $1.50, not the best news if you are looking to purchase dollars in the next few months.

If you have a requirement to buy dollars in the coming weeks it is vital to know what options are available to help you make the most from your transfer. A number of my clients are taking advantage of a Forward Contract which enables you to secure a rate of exchange for up to two years into the future.

A Forward contract is a great budgeting tool and a great way of reducing your exposure to the ever changing FX market. For more information on Forward Contracts or to find out what rate of exchange I can offer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

Click here to complete the contact form.

Monday, 17 August 2015

GBP/USD continues to fall

Good afternoon,

A brief spike this morning saw GBP/USD climb to $1.5686, however the pound was unable to sustain the gains as the U.S dollar strengthened for the third consecutive day. The currency pair dropped over a cent during today's session, falling to a low of $1.5580 as traders continue to focus on a Federal Reserve rate hike.

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Why is the dollar strengthening?


After the People's Bank of China (PBOC) unexpectedly devalued its currency last week, the dollar dropped across the board amid concerns over a potential currency war. The move by the PBOC dampened expectations the Federal Reserve would raise its benchmark rate next month.

However, today saw China's central bank set the yuan above its fixing rate last Friday which cooled fears the PBOC would continue to reduce the yuan's value. Coupled with a positive report from the National Association of Home Builders this afternoon, it seems a rate hike by the Federal Reserve in September is back on the cards.

What to look out for this week.


Investors will be now switch their attention to Wednesday's U.S. inflation reading and the minutes from the latest Federal Reserve policy meeting. Both will be monitored closely as they could provide an insight to when the Fed is likely to act.

Tomorrow will see the UK's latest inflation reading which could also have a bearing on the GBP/USD cross. The forecast is for the inflation to remain a 0% but any deviation from the expected reading is likely to impact the value of the pound.

Do you need to buy or sell dollars?


If you have a requirement to buy or sell dollars in the coming weeks and want to ensure you are making the most from your transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

Click here to complete the contact form

Thursday, 13 August 2015

GBP/USD exchange rate slips on the back of postive news from China

Good afternoon,

The dollar strengthened across the board during today's session as fears over China devaluing its currency further started to ease. The dollar was also given a boost after retail figures in the U.S recovered after last months slump. The news meant GBP/USD slipped from a day high of $1.5640 back to $1.5580 before finding its feet around $1.56.

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After falling on Wednesday the dollar has managed to recover against most of the other major currencies as the yuan's decline slowed throughout today.

There had been concerns that the Peoples Bank of China (PBOC) had deliberately devalued its currency in an attempt to help exporters, but following an announcement from China's central bank that there was no basis for further yuan depreciation, the dollar was able to recover the lost ground.

Attention will now turn back to the Federal Reserve and the potential interest rate hike in September. Today's positive retail figures, which were in line with economists' forecasts will certainly boost expectations the Fed will raise their benchmark rate next month.

Despite Vice Chairman Fischer's dovish comments on Tuesday it seems investors and market players still believe the Fed will raise interest rates for the first time in nearly a decade.

As I have mentioned before a rate hike in September, coupled with the Bank of England seemingly pushing back a rate rise of their own could easily see GBP/USD lose some ground. In my opinion a rate hike from the Fed next month could push GBP/USD back towards the $1.50 mark a level we have not seen since April.

If you have a requirement to buy dollars in the coming weeks it is vital to know what options are available to help you make the most from your transfer. A number of my clients are taking advantage of a Forward Contract which enables you to secure a rate of exchange for up to two years into the future.

A Forward contract is a great budgeting tool and a great way of reducing your exposure to the ever changing FX market. For more information on Forward Contracts or to find out what rate of exchange I can offer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

Click here to complete the contact form.

Tuesday, 11 August 2015

Sterling recovers some lost ground


Good afternoon,

The GBP/USD cross has remained relatively flat throughout today's trading session with the currency pair spending most of its time between $1.5570 and $1.5600.

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The week started reasonably well for the pound as comments from Federal Reserve Vice Chairman Stanley Fischer dampened expectations we could see the U.S central bank raise interest rates in September.

Following Friday's positive jobs report the dollar's value surged as investment flows increased into the U.S in preparation for a September hike. The gains made by the dollar on the back of the jobs numbers were short lived though, as Vice Chairman Fischer spoke on Bloomberg TV yesterday.

During an interview on Monday morning Vice Chairman Fischer indicated the current global deflationary trend was a concern but was quick to highlight that it is one of many factors the central bank are currently looking at.

As a result of the comments GBP/USD rose nearly a cent and a half over the course of yesterday, with the mid-market price climbing from $1.5463 to $1.5593.

Who will act first?


With so much uncertainty still surrounding a rate hike in the U.S. the next few weeks are going to be key for the short to medium term future of the GBP/USD cross.

If we the Fed fail to act in September we could see the dollar lose some ground, especially as the Bank of England are hot on their heels. Also, with Greece making headway with the creditors over a potential bailout package the dollar could come under pressure as investors turn their attention to riskier assets.

As a specialist currency broker I am often asked where the rate will be in the future. Although it is impossible to predict which way the FX markets will move there is a simple answer to that question at the moment.

If the Fed raise interest rates in September we will probably see the GBP/USD rate fall and if the rate decision is pushed back then GBP/USD will probably rise.

Do you want to make the most from your transfer?


If you have a requirement to buy or sell dollars in the coming weeks or months and want to ensure you are making the most from your transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

Click here to complete the contact form.

Friday, 7 August 2015

GBP/USD exchange rate continues to slide

Good afternoon,

It has not been the best 48 hours for the GBP/USD cross with the pound losing around two cents against dollar. Since my last post the currency pair has slipped from $1.5633 to $1.5434 following the dovish Bank of England interest rate vote on Thursday and another strong job report from the U.S. this afternoon.

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The pounds demise started yesterday after only one of the nine Monetary Policy Committee members voted in favour of increasing their benchmark rate. It was a move that surprised almost everyone, as many within the markets had been expecting at least two of the MPC to vote for a rate hike.

Despite BoE Governor Mark Carney suggesting last month that a rate rise was on the horizon, yesterday's announcement shows the central bank are in no hurry to act and as a result the wind was well and truly taken from the pounds sails.

With the U.S. Federal Reserve on the brink of increasing their rate in September, the pound could be set for further losses against a resurgent dollar.

Sterling then lost more ground this afternoon after the U.S released their latest job numbers. As news broke that the U.S had added over 200,000 jobs last month the dollar rose across the board and pushed GBP/USD back to its lowest levels since early July.

Today's positive job report will increase the chances of the Federal Reserve increasing interest rates next month and if they do, I wouldn't be surprised to see GBP/USD fall back towards the $1.50 mark.

If you have a requirement to buy or sell dollars in the coming weeks or months and want to make sure you are making the most from transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

Click here to complete the contact form.