Tuesday, 25 August 2015

GBP/USD drops a cent

Good afternoon,

The dollar rebounded today to claw back some of the ground it lost during yesterday's turbulent session. The GBP/USD cross fell sharply after the Peoples Bank of China (PBOC) announced they would cut their one year benchmark lending rate by 25 basis points to 4.6%, giving a boost to risker assets.

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After briefly breaking through $1.58 this morning GBP/USD ended the day back below $1.57  following the announcement from China's central bank. The dollar was hit hard yesterday as stocks crashed and has left investors with little hope the U.S. Federal Reserve will increase interest rates next month.

Many within the market had bet on Janet Yellen and FOMC raising rates in September following a run of positive data for the U.S. economy. A rate hike from the Federal Reserve would have given the dollar a major boost by driving investment flows into the U.S.

However, with a rate hike now seemingly off the cards the volatility for GBP/USD is set continue. Forecasts are now suggesting the Fed will look to push back their rate hike until early 2016 while the Bank of England may not act until the third quarter of next year.

Until we hear something concrete from the UK and U.S. central banks the pound and dollar will continue to come under pressure from safe-haven currencies such as the euro and yen.

So if you have an upcoming requirement to buy or sell dollars in the coming months and want to ensure you are making the most from your transfer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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