Pound Dollar Forecast weekly overview

Sterling continued its surge against the dollar early last week after recent PMI data showed that the UK manufacturing sector grew at its fastest pace for ten months in March.

GBP/USD rates peaked as $1.6063 last Monday morning, pushing past the highs of the previous week and held over the $1.60 throughout the day.  This recent positive data is a sign that the UK economy actually grew in the first quarter of 2012 and could avoid slipping back into recession.  Despite this, many investors could be hesitant about pushing the pound too high considering there is still a possibility of further quantitative easing in the UK.

The highs were short lived as Sterling fell against the dollar throughout Tuesday due to asset sales in Asia. Rates dropped by 0.5% from the start of the day to $1.5955.  But losses were reduced

by positive manufacturing and construction data that went someway to ease concerns over the UK economy.

Throughout the week Sterling slipped against a stronger dollar despite data showing that the UK’s services sector grew in March.  Rates fell around 0.8% after Federal Reserve minutes indicated the bank will hold off from injecting further money into the U.S economy.  The minutes from the Federal Reserve’s March meeting provided an insight into how the policy-setting committee members voted. Only two of the ten members voted in favour of additional stimulus, which was a surprise considering the speeches made by Chairman Ben Bernanke last week pointed towards more money being pumped into the U.S economy.

Rates steadily fell from the $1.60 mark that was seen at the start of the week and reached a low of $1.5821 during the latter stages of the week. The decline was down to dollar strength rather than Sterling weakness, the Fed minutes and a disappointing Spanish bond auction led investors to leave the single currency (Euro) and head back to the safe haven status of the U.S dollar.

Analysts said sterling would struggle to sustain a move over $1.60 which looks to have been true. With rates still close to the highest we have seen since November it is still a very good time to buy dollars, with a Forward contract you can take advantage of the current highs and book your rate of exchange for up to two years in advance. 


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