Dollar gains strength on the back of Euro weakness

Tuesday saw pound/dollar rates fall by over a point despite the positive news that UK house prices declined at their slowest pace for 22 months in March. Rates fell from $1.5925 to $1.5823 as the dollar once again benefited from the continued uncertainty surrounding the Euro.

Recent data has given added support to sterling and today’sv data release regarding UK house prices further reduced concerns that UK is heading back into recession. Last week the Bank of England (BoE) policy makers voted to hold interest rates at 0.5% and keep their asset buying programme at 325 billion pounds. Had policy makers chosen to pump more money into the UK economy we could well have seen pound dollar rates fall further from the highs we saw at the start of last week.

The dollars gains on Tuesday were down to a drop in appetite for riskier currencies, recent PMI data from the Euro has indicated a contraction in activity while rising costs to insure Spanish and Italian debt prompted investors to head back across the pond to the safe haven status of the US dollar.

Recent events show how quickly the currency markets can change and how difficult it is to predict which way the market will move. The best advice I can offer to anyone looking to buy or sell dollars in the coming months is to set you a target and stick to it.

You can use Stop and Limit orders to help achieve rates that are not currently available and protect you from any adverse movements. If you are looking to buy or sell dollars in the coming weeks or months click here to send me a direct email or complete the contact form on the homepage of the blog.