Thursday, 30 October 2014

Fed annoucnement forces GBP/USD exchange rates back under $1.60


Good afternoon,

After six years of quantitative easing (QE) the U.S. Federal Reserve (Fed) announced last night they would be bringing an end to their stimulus programme. With economic conditions improving the Fed are confident the U.S. economy no longer needs their support and the announcement had an immediate impact on the dollars value.

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As the news broke at 6pm (GMT) the GBP/USD cross dropped from $1.6128 to $1.6014 and over the next few hours continued to slide until the currency pair reached a low of $1.5968 as the graph below shows.



What next for the U.S?

Now that the Fed have ended their bond buying programme the focus will now turn to interest rates, although it is unlikely we will see any hike in the immediate future. With inflation in the U.S. still well below the target level and concerns hovering over the labour market I don't think we will see any knee jerk reactions from Janet Yellen.

The U.S are now in a similar position to the UK and if the both economies continue to improve there will be calls for interest rates to rise. Whoever moves first out of the Fed and Bank of England could lead to a surge for the relevant currency, so expect the volatility we have seen for the GBP/USD cross to continue over the next few months.

If you are looking to buy or sell dollars in the coming months and want to ensure you are making the most from your transfer, it is important to know what tools are available (unless of course you have a crystal ball!).

For more information on the different types of currency contract 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.

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Tuesday, 28 October 2014

GBP/USD exchange rates push towards $1.62

Good afternoon,

The pound had another boost this afternoon after the U.S. posted some weaker economic numbers for the second day running. After dipping back below $1.61 this morning Sterling gained nearly a cent during today's session, reaching a of $1.6182 immediately after the U.S. data releases.

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Today's figures from the U.S. came in the form of Core Durable Goods Orders, which are a good indicator of production. A positive figure signals a rise in the number of orders received by manufacturers and therefore increases activity. It was widely anticipated the figures rise by 0.1% to 0.5% from the previous month but with the actual figure coming in at -0.2% the dollars value again dropped against the pound and euro.

The last couple of days will not be great news for the U.S. Federal Reserve (FED), especially in the run up to their statement tomorrow. Despite the poor figures over the past few days we should still see the FED bring an end to their stimulus programme tomorrow and there is every chance the dollar will claw back the ground it has lost over the course of today.

Even with the pound gaining ground over the last 48 hours the long term forecast for GBP/USD is still not looking particularly rosy. If the FED do wind up the stimulus programme tomorrow all focus will then shift to when the central bank will look to raise interest rates. With the Bank of England moving the goal posts on what seems like a daily basis there is now a real possibility we could see a rate hike in the States before we see one in the UK.

If you are looking to buy or sell dollars in the coming weeks or months and want to ensure you are making the most from your transfer it is vital you are aware of the different tools that are available. For more information on the different types of currency 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.

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Monday, 27 October 2014

GBP/USD back over $1.61 but will it last?

Good afternoon,

It has been a slow start to the week but GBP/USD has managed to climb back over $1.61 during today's trading session. The currency pair opened around $1.6090 and rose to a high of 1.6144 this afternoon following some weaker than forecast numbers from U.S. This small rise is the highest we have seen the GBP/USD for a week but that could all change over the next few days.

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What caused todays move?

Before the economic data releases from the U.S. the Sterling/dollar had been hovering around $1.61 and had remained within a 20 pip range all morning. This afternoons Flash Services PMI and Pending Home Sales numbers from the States both disappointed with both coming in under the predicted level.

The Pending Home Sales numbers will have had a bigger impact on the FX markets as they are a good indicator of overall economic health. This is because the sale of a home can trigger a number of other services which can boost an economy and with today's figure coming out at 0.3% against a predicted level of 1.1% the dollar lost ground against the pound and euro.

What to watch out for this week.

Although it has been a quiet start the rest of the week will see a number of key data releases from the UK and the U.S. The one that stands out though is the U.S. Federal Reserve (FED) meeting and statement on Wednesday. It is widely expected that the FED will finally bring an end to their stimulus package which they have been reducing since January of this Year.

If it is confirmed and the final $15 billion is wound up then there is every chance we will see the dollar have a bit of a surge on Wednesday evening. The announcement could easily bring the GBP/USD cross down and I wouldn't be surprised if I came in on Thursday to see the cross back below $1.60.

The only saving grace for those of you looking to buy dollars is that the cut in stimulus could already be priced into the market as the FED have been talking about finishing the programme in October for some time.

If you need to buy or sell dollars in the coming days 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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Wednesday, 22 October 2014

The pound drops after Bank of England minutes


Good afternoon,

Sterling lost ground against the dollar today following the release of the Bank of England minutes from their October meeting. Trading opened this morning with the GBP/USD cross sitting above $1.6125 but after the minutes were released the pound slipped to a low of $1.6018 before recovering slightly this afternoon.

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For the third month running the Bank of England's Monetary Policy Committee (MPC) voted to keep interest rates in the UK at the current level of 0.5%. The minutes indicated there was "insufficient evidence" to warrant a rate rise, though two of the MPC members again voted to raise rates.

The fact two of the nine MPC members voted to raise rates came as bit of a surprise this morning. For the last two months the vote has been 7-2 in favour of keeping rates on hold and with consumer spending dropping I thought the vote could have changed to 8-1, especially as the Bank of England had access to Septembers inflation figures before they met.

With UK inflation currently standing at 1.2%, its lowest levels since 2009, any chance of a rate rise before the elections in spring now seem remarkably slim. The U.S. economy is still showing signs of recovery and if the Federal Reserve do wind up their stimulus package at the end of the month the GBP/USD cross could be open for further losses.

If things continue on this current path then I don't think it will be long until we see GBP/USD exchange rates drop and remain under $1.60 for a sustained period of time. One of the forecasts I received this morning showed GBP/USD could be down as low as $1.56 in the next 6 months which would take Sterling's losses against the dollar to around 9% since July.

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.

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Monday, 13 October 2014

GBP/USD exchange rates continue recent trend

Good afternoon,

The pound suffered across the board today as reports showed the UK economy is suffering from the slowdown in the Eurozone. Despite a market holiday in the U.S due to Columbus Day, GBP/USD fell from $1.6111 to $1.6052 as UK manufacturers start to feel the impact from a strong pound and worsening conditions with their largest trade partner.

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With the pound and UK economy out performing many of its major counterparts over the past twelve months or so, Sterling has been on the march. This has been great for anyone looking to sell pounds and convert into another currency but for UK exporters the strain on their business is now starting to show.

A trend report from BDO, an accountancy and services group indicated that growth expectations among UK manufacturers had fallen at its fasted rate since May last year. The worry will be if UK exports continue to suffer then we could see a knock on effect for the rest of the economy. We have already seen the pound lose over 7% against the dollar in the last three months and with the U.S. economy picking up, Sterling could be set for further loses.

Can I protect myself from a falling pound?

Yes, as a specialist currency broker I have a range of contracts at my disposal to help protect you from adverse market movements. I can help secure a rate for up to two years into the future using a Forward Contract or use a Stop Loss order to act as a safety net, which will allow you to hold out for a better exchange rate and protect yourself from a sudden fall in the market.

If you have a requirement to buy or sell dollars in the coming weeks or months and would like to make 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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Friday, 10 October 2014

GBP/USD exchange rates drops back again

Good afternoon,

It has been another difficult 48 hours for the pound with sterling continuing its recent downward trend against the dollar. Despite the U.S Federal Reserve indicating there is no rate rise on the horizon and the UK trade deficit narrowing, the pound still managed to lose the ground it made earlier in the week. The GBP/USD cross finished the day below $1.6050, a loss of over a cent during todays trading session.

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Why has the pound weakened?

With UK inflation starting to ease the Bank of England may be in a position to keep interest rates lower for longer, which may have impacted investor confidence. The BoE decided yesterday to keep interest rates at their current level which came as no real surprise. However, in two weeks time the central bank will reveal the result of how the policy committee voted and if the number of members voting for a rate hike increases (two last month) the pound could stage a mini revival.

What next for GBP/USD?

The pound has lost over 7% against the dollar in the last few months and this has been mainly down to dollar strength rather the sterling weakness. If the BoE act before the FED in increasing interest rates we could see the pound fight back but with the results could be minimal, There is every chance a rate rise has already been priced into the market so even if the BoE make the first move I cannot see rates pushing back towards $1.70 in the near future.

What to do next

With the FX market impossible to predict, knowing what tools are available can help you get the timing right on your transaction and make the most from your transfer. If you need to buy or sell dollars in the coming weeks and want to ensure you are getting the best possible rate, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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Wednesday, 8 October 2014

GBP/USD exchange rates back over $1.60

Good afternoon,

It has been a fairly choppy day for the GBP/USD cross with exchange rates jumping between $1.6050 and $1.6110 throughout today. The good news is the pound has managed to put a temporary halt to its decline against the dollar, gaining over a cent and a half over the past two trading sessions.

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With the dollar gaining over 7% against the pound since July the greenback has been the dominant currency over the past couple of months. The U.S economy has bounced back from a difficult start to the year and with the U.S Federal in the processing of winding up their stimulus package the dollar has been on the march against a number of currencies.

After falling from $1.72 GBP/USD is now close to a one year low. While EUR/USD has dropped by nearly 10% since May leaving the currency pair at its lowest level for nearly two years, so if the dollar maintains its current position it seems set to be the currency of choice for 2014.

What could move rates in the coming days?

Investors and market players will be keeping a close on proceedings tomorrow as there are a number of key releases and speeches. The Bank of England will announce their latest interest rate decision followed by a Statement by Governor Mark Carney. There is also a speech from the European Central Bank President Mario Draghi and with the Eurozone struggling the pound and dollar could be set to for further gains.

We will also hear from Federal Reserve Governors Daniel Tarullo and Stanley Fischer which could cause some volatility in as FOMC engagements are often used to drop hints regarding future monetary policies.

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 for a free, no-obligation consultation.

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