Pound Dollar overview

After experiencing a seven week low in mid-march, the GBP/USD rate strengthened last Monday and crossed the $1.59 barrier (interbank) which was the highest level seen since the beginning of March.

In the early part of the week the GBP/USD remained flat as the markets awaited key data in the form of Bank of England minutes and the UK budget. The minutes showed a surprisingly negative slant as rate setters Adam Posen and David Miles pushed for more quantitative easing to try to stimulate the economy. Sterling subsequently slipped against the dollar with this news and is a stark reminder for investors that the British economy is still in a vulnerable position. 

"Sterling is being moved a lot more by what's going on elsewhere but I was shocked by the dovish nature of the minutes as most people thought more QE in May was off the table and this puts the risk of it back on," said Kathleen Brooks, research director at FOREX.com.

The following day the pound showed little reaction to what analysts and ratings agencies described as a fiscally neutral UK budget. Fitch ratings said finance minister George Osborne's proposals showed commitment to deficit reduction and would not impact the UK's AAA rating.  The outlook for sterling depends on the economy - it could take a long time for recovery to take root, and sterling probably will only rally when there are signs that's happening. “About the best you can say of the budget was that it won't hurt” said analysts at Societe Generale.

It was a busy week in the US for data with most of it having little effect on rates. But unemployment data released last week showed a drop to the lowest level in four years, reinforcing signs the U.S. labour market is picking up. Jobless claims also decreased by 5,000 to 348,000 which continue to keep rates at a decent level.

GBP/USD has been choppy recently with the mixed economic figures coming out of both countries. We continue to see the pair make moves in both directions and many analysts are torn over their forecast with some thinking that the cross will end up towards the $1.50 level within the next twelve months, and others believing firmly that the 1.60 barrier will be broken very soon. 

With so much volatility between the GBP/USD, it is integral to keep in touch, I can  help you make an informed decision as to when you buy or sell your dollars.  Click here to send me a direct email or use the contact form on the homepage of the blog.