Sterling/dollar exchange rates broke through $1.54 today for the first time since the 10th May, the gains the pound made against the dollar followed stronger UK services sector numbers and a string of weaker than forecast data releases in the States. For more information on the live exchange rates click here.
GBP/USD rates started the day with the mid-market price hovering just above $1.53 but after the UK data release this morning the pound climbed over half a point against the greenback to reach $1.5365. The gains did not stop there as worse than expected U.S factory orders were one of the factors to weaken the dollar and push exchange rates to the highest we have seen in almost a month.
This morning (Wednesday) once again provided some positive news for the UK as figures released by Markit and CIPS (Chartered Institute of Purchasing and Supply) showed the UK's services sector grew at it fastest pace for twelve months. The services sector makes up around 75% of the UK economy and proves that the UK could be on the road to recovery. The news could also go some way to dampen rumors that the Bank of England (BoE) will look to boost economic growth by adding to their existing Quantitative Easing (QE) program.
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Any talk of further stimulus normally has a negative impact on Sterling's value and if there is any chance of more QE when the BoE meet tomorrow the gains we have seen in rates over the last few days will quickly disappear.
The next month or so is going to be critical in Sterling's performance, not only against the dollar but against every other currency. As I mentioned in my last post there has been a lot of talk recently that when Mark Carney takes over as the BoE governor one of the first things he will look into is how to boost UK exports. One way way to achieve this would be to reduce the pounds value to make products more affordable, if that happens we can expect GBP/USD exchange rates to drop quickly, it is hard to say by how much but it would not come as a surprise if rates dropped well below $1.50.
If you need to buy or sell dollars in the coming months getting the timing right on your transfer could save you thousands. If you would like more information on how I can help or would like to know what rates of exchange I can offer, use the link below and complete the contact form for a free, no-obligation consultation.
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