Monday, 30 January 2017

The pound heading back towards $1.25 against the dollar

The pound has been edging lower against the dollar over the course of today, with the GBP/USD cross giving up over a cent since midnight.


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This morning saw the currency pair fall from $1.26 to $1.2494, despite investors dumping the dollar as fears continue to mount over President Trump's new immigration policy, and the risks his protectionist views may pose for the U.S. economy.

GBP/USD graph

So why has the pound fallen against the dollar?


It would seem the uncertainty surrounding the upcoming Brexit negotiations and the triggering of Article 50 are still weighing heavily on the pound.

Investors will also be looking ahead to Thursday's Bank of England meeting. Although we are not expecting any major surprises from Mark Carney and the Monetary Policy Committee, markets will be erring on the side of caution as they wait for the latest inflation are growth forecasts.

It is widely expected that Mark Carney will announce the UK central bank will revise up its short-term inflation and growth forecasts, as the UK economy has continued to perform well since the referendum result in June, which if happens could see the pound claw back some of the ground it has lost during today's trading session.

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