Today has seen sterling rise by nearly 1% against the greenback following better than expected jobs claimant data, no movement from the Bank of England (BoE) and a positive budget announcement from Chancellor George Osborne. The pound reacted to reach a peak of $1.5183, the highest we have seen cable since the 8th March. Today's post will take a closer look at the events that improved sterling's fortunes and what my thoughts are for future GBP/USD exchange rates.
At the start of trading today sterling/dollar rates dropped in the build up to the UK Jobs data and the release of the Bank of England minutes. Just before the data was released rates hit a low of $1.5028 but in an upturn for the UK economy the number of people claiming Jobseeker's Allowance fell by 1500 to reach their lowest levels for nearly two years. Coupled with the BoE minutes that saw no change in the way policymakers voted for more monetary stimulus, sterling rallied to gain over once cent as all eyes then refocused on the Chancellor and his budget.
Want a commercial rates of exchange? Click here
At lunch time George Osborne delivered his new budget package and despite cutting the growth forecast for 2013 by halve to 0.6% there was some positive news to try and stimulate the UK economy. The Shared Equity Scheme has been extended with interest free loans on offer for any home buyers looking at new build properties and although its great news for people looking to buy a new home it is also an attempt to get the UK Construction Sector back on track. Mr Osborne also went onto say that by 2015 they will reduce Corporation Tax by a further percent to 20% to try and encourage businesses to the UK. The news sparked another jump in exchanges rates to push the pound towards $1.52 the highest we have seen for two weeks.
So which way will exchange rates go now?
It is still very difficult to try and predict which way rates will move. The latest announcements from the government might well help strengthen sterling in the long run but short term the outlook is still bleak. I still think it is likely the UK will head back into recession when the figures are released in April so the gains we have seen over the last couple of days could well be short lived. As I have mentioned before some forecasts still see sterling falling to 1.40 against the dollar by the end of the year, although I don't see rates falling that low in April it is possible that rates will slip past the $1.4830 low we witnessed last week.
With so much uncertainty surrounding the currency markets and such a wide spread on forecasts it is more important than ever to know what options are available. If you are a business or private client and are looking to buy or sell dollars in the coming months click on the link below and complete the contact form for a free, no obligation consultation to see how much money you can save.
Click here to complete the contact form
