Thursday 13 August 2015

GBP/USD exchange rate slips on the back of postive news from China

Good afternoon,

The dollar strengthened across the board during today's session as fears over China devaluing its currency further started to ease. The dollar was also given a boost after retail figures in the U.S recovered after last months slump. The news meant GBP/USD slipped from a day high of $1.5640 back to $1.5580 before finding its feet around $1.56.

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After falling on Wednesday the dollar has managed to recover against most of the other major currencies as the yuan's decline slowed throughout today.

There had been concerns that the Peoples Bank of China (PBOC) had deliberately devalued its currency in an attempt to help exporters, but following an announcement from China's central bank that there was no basis for further yuan depreciation, the dollar was able to recover the lost ground.

Attention will now turn back to the Federal Reserve and the potential interest rate hike in September. Today's positive retail figures, which were in line with economists' forecasts will certainly boost expectations the Fed will raise their benchmark rate next month.

Despite Vice Chairman Fischer's dovish comments on Tuesday it seems investors and market players still believe the Fed will raise interest rates for the first time in nearly a decade.

As I have mentioned before a rate hike in September, coupled with the Bank of England seemingly pushing back a rate rise of their own could easily see GBP/USD lose some ground. In my opinion a rate hike from the Fed next month could push GBP/USD back towards the $1.50 mark a level we have not seen since April.

If you have a requirement to buy dollars in the coming weeks it is vital to know what options are available to help you make the most from your transfer. A number of my clients are taking advantage of a Forward Contract which enables you to secure a rate of exchange for up to two years into the future.

A Forward contract is a great budgeting tool and a great way of reducing your exposure to the ever changing FX market. For more information on Forward Contracts or to find out what rate of exchange I can offer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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