The last 24 hours have seen another rise for the GBP/USD cross with exchange rates reaching a fresh high of $1.5684. Today's high moved us past the $1.5679 we witnessed last Thursday which means we have come close to a 4% rise in exchange rates since the start of June. To put the move in monetary terms a £200,000 trade will now see you receive an extra $11,500 compared to the same trade booked less than two weeks ago. For more information on live rates of exchange click here.
In my last post I wrote that the mid-market price for GBP/USD had fallen back to just below $1.55 following the better than expected jobs report in America. However, the gains for the greenback were short lived as the dollar weakened yesterday amid growing speculation that the FED will look to reduce its bond purchasing programme in the next few months. The rumours caused the dollar to fall against the pound and the euro with Sterling-Dollar rates jumping back over 1.56 and Euro-Dollar reaching a high of 1.3315.
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Another reason for Sterling's positive move today was down to the latest unemployment figures from the UK. In a report published by the Office of National Statistics (ONS) the number of people out of work for the three months up to April fell by 5,000. There was also a surprise drop in the number of people claiming Job-Seekers Allowance, claimants fell by 8,500 in May compared to the previous month and today's figures are another boost for the UK economy following a string of positive data releases over the last couple of weeks.
Can we expect Sterling to keep on climbing?
After all the positive reports and data releases we have seen in the last month you would think GBP/USD exchange rates could carrying on gaining and push towards the $1.60 mark we saw through the latter part of last year. If it was not for Mark Carney taking over the Bank of England next month then I would be inclined to agree. Over the last few months the UK has avoided going into recession, seen a increase in manufacturing and production and with today's data showing that unemployment is falling all the signs are that the UK is on the road to recovery.
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However, many believe that Mr Carney wants the UK's recovery to be export driven and unfortunately that will not happen while the pound is gaining strength against the dollar and euro. It is thought that when Mr Carney is handed the ropes to the central bank he will look to try and devalue the pound in order to make UK products more appealing to our largest trade partner, the Euro-zone.
If that happens we can expect to see the pound lose any ground it has made against the major currencies since March, in fact some of the forecasts from the big UK banks believe we could see the GBP/USD cross fall back below $1.47 in the next three months.
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