Sterling/dollar exchange rates have continued to move in a positive direction since my last post. The mid-market price climbed today to reach a high of $1.5670 meaning the pound has now gained 3.75% since the start of the month. To put that into monetary terms a £200,000 trade into dollars will now see you receive around $11,300 more than the same trade booked at the beginning of August. For live rates of exchange click here.
The latest move is great news for anyone looking to purchase dollars as the GBP/USD cross is now sitting at its highest level for two months. It is not so positive for those looking to sell dollars though, since the 10th July the mid-market price has rocketed from a low of $1.4859 as sterling claws back some of the ground it has lost since the start of 2013.
So what can we expect in the coming weeks?
I for one have been surprised at how quickly the pound has risen against the greenback, it was only a couple of weeks ago I posted that one of my brokers had revised their long term forecast for GBP/USD to $1.41. Over the last few days that has become increasingly unlikely, especially as the markets have reacted very positively to the Bank of England (BoE) issuing 'Forward Guidance'. The UK seems to have turned a corner recently and a run of positive data releases and if that continues we could well see exchange rates climb even higher.
For commercial rates of exchange click here.
One of the reasons why my broker thought Sterling/dollar would fall to $1.41 was down to all the talk surrounding the U.S Federal Reserve (FED) and their stimulus package. Speculation had been mounting that the FED were looking to start reducing the amount they are injecting into the U.S economy (currently $85 billion per month). However, with a fall in the number of jobs being created and a string of poor data releases it seems FED Chairman Ben Bernanke will have to wait a little longer before he can begin winding up the programme.
The pound has benefited massively because of the recent dip in the U.S economy but it is still only a matter of time until the FED issue the green light to being tapering and when they do we should start to see the dollar strengthen. The difference between now and a few weeks ago is that the UK economy and the pound are now in a much stronger position, so when the dollar does start to strengthen it means there is more of a cushion in place and that any immediate danger of the GBP/USD cross falling back below $1.50 seems to have past (for the time being!).
So with things looking more positive and exchange rates at a fresh high now is a good time to look at buying your U.S dollars. For those of you looking to sell, looking at Stop and Limit orders can help you target a lower rate of exchange but at the same time protect you against anymore adverse market movement.
If you would like more information on how I can help you make the most from your currency transfer then use the link below and complete the contact form for a free, no-obligation consultation.
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