Sterling recovers some lost ground

Good afternoon,

The GBP/USD cross has remained relatively flat throughout today's trading session with the currency pair spending most of its time between $1.5570 and $1.5600.

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The week started reasonably well for the pound as comments from Federal Reserve Vice Chairman Stanley Fischer dampened expectations we could see the U.S central bank raise interest rates in September.

Following Friday's positive jobs report the dollar's value surged as investment flows increased into the U.S in preparation for a September hike. The gains made by the dollar on the back of the jobs numbers were short lived though, as Vice Chairman Fischer spoke on Bloomberg TV yesterday.

During an interview on Monday morning Vice Chairman Fischer indicated the current global deflationary trend was a concern but was quick to highlight that it is one of many factors the central bank are currently looking at.

As a result of the comments GBP/USD rose nearly a cent and a half over the course of yesterday, with the mid-market price climbing from $1.5463 to $1.5593.

Who will act first?

With so much uncertainty still surrounding a rate hike in the U.S. the next few weeks are going to be key for the short to medium term future of the GBP/USD cross.

If we the Fed fail to act in September we could see the dollar lose some ground, especially as the Bank of England are hot on their heels. Also, with Greece making headway with the creditors over a potential bailout package the dollar could come under pressure as investors turn their attention to riskier assets.

As a specialist currency broker I am often asked where the rate will be in the future. Although it is impossible to predict which way the FX markets will move there is a simple answer to that question at the moment.

If the Fed raise interest rates in September we will probably see the GBP/USD rate fall and if the rate decision is pushed back then GBP/USD will probably rise.

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GBP/USD exchange rate continues to slide

Good afternoon,

It has not been the best 48 hours for the GBP/USD cross with the pound losing around two cents against dollar. Since my last post the currency pair has slipped from $1.5633 to $1.5434 following the dovish Bank of England interest rate vote on Thursday and another strong job report from the U.S. this afternoon.

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The pounds demise started yesterday after only one of the nine Monetary Policy Committee members voted in favour of increasing their benchmark rate. It was a move that surprised almost everyone, as many within the markets had been expecting at least two of the MPC to vote for a rate hike.

Despite BoE Governor Mark Carney suggesting last month that a rate rise was on the horizon, yesterday's announcement shows the central bank are in no hurry to act and as a result the wind was well and truly taken from the pounds sails.

With the U.S. Federal Reserve on the brink of increasing their rate in September, the pound could be set for further losses against a resurgent dollar.

Sterling then lost more ground this afternoon after the U.S released their latest job numbers. As news broke that the U.S had added over 200,000 jobs last month the dollar rose across the board and pushed GBP/USD back to its lowest levels since early July.

Today's positive job report will increase the chances of the Federal Reserve increasing interest rates next month and if they do, I wouldn't be surprised to see GBP/USD fall back towards the $1.50 mark.

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GBP/USD exchange rates continue to bounce

Good afternoon,

It has been a choppy twenty-four hours for GBP/USD, with the currency pair moving between $1.5647 and $1.5526 as the graph below shows.

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The dollar received another boost on Tuesday evening as Atlanta Federal Reserve chief Dennis Lockhart indicated the U.S. central bank could look to raise interest rates in September.

Speculation has been mounting in recent weeks as to when the FED will increase its benchmark rate, with investors caught between a potential September or December rate hike.

Yesterdays comments from Mr Lockhart seem to have given investors the confidence that we will see the FED take action sooner rather than later and as a result the dollar strengthened across the board.

On the back of the announcement GBP/USD slipped over a cent with the mid-market price falling from $1.5631 to $1.5526. However, the dollars gains were short-lived as the pound managed to claw back the ground during today's session.

Big day for the Bank of England

Tomorrow is being dubbed 'Super Thursday' with the Bank of England set to change the way it delivers its inflation forecasts and stance on monetary policy.

From tomorrow the UK's central bank will announce its latest interest rate decision and inflation report along with the latest meeting minutes. We usually have to wait two weeks for the BoE to publish the minutes, which also show how the nine MPC members voted in regards to interest rates.

With all the information coming tomorrow everyone is keeping an eye on the votes to see if there is any change to the 9-0 result we have seen since the turn of the year.

Forecasts are suggesting we will see a split vote of 7-2, which last happened in December and it is the potential split vote that caused Sterling to recover the lost ground today.

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GBP/USD rate update

Good afternoon,

Firstly apologies for the lack of posts over the past few weeks, a technical issue has prevented any updates.

So lets take a moment and look at what has happened to GBP/USD exchange rates over the past couple of weeks. In my last post I mentioned that the GBP/USD had broken through $1.59 following dovish comments from the Federal Reserve.

Since then the currency pair has been slowly falling away as events around the globe have seen the dollar start to strengthen, which has left the current mid-market price at $1.5555.

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With Greece still in negotiations with their credits over a fresh €86bn bailout package, investors and market players have been keen to take advantage of the dollars safe-haven status.

In the last week there have also been further developments about when the U.S. Federal Reserve will look to increase their benchmark rate. It now seems the central bank will look at a rate hike this year, though there are still question marks over when it will actually happen.

The general consensus is that we will see the FED take action in September, however, if the U.S. economy tails off between now and September we could see the decision pushed back towards December.

What does this mean for GBP/USD?

If the FED do indeed raise interest rates in September we could easily see GBP/USD exchange rates continue to slide. Investors will look for a higher return on their investments and I wouldn't be surprised if we saw the rate dip back towards the $1.50 mark.

But what if the rate hike is pushed back?

If the FED fail to act in September then it will become a two horse race between the FED and Bank of England. Comments from BoE Governor Mark Carney last week indicated that a rate hike in the UK was on the horizon and that we could see an increase towards the end of the year.

I think it is highly unlikely the Bank of England will act before the FED but if they do we could see GBP/USD test the $1.60 barrier for the first time this year.

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GBP/USD exchange rates break $1.59

Good morning,

Following the dovish comments from Fed Chair Janet Yellen last night, this morning has seen GBP/USD exchange rates climb to their highest level since November. In my last post I mentioned that the currency pair had climbed to a fresh one month high but this morning's move completely eclipses yesterday's rise.

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Speculation had been mounting that last night's FOMC meeting would provide us with a clear picture of when the Federal Reserve would raise interest rates. Ms Yellen said that the central bank could look to raise interest rates this year but it was the comments that followed that really impacted the value of the dollar.

It appears the central bank want further improvement in the labour market and are looking for inflation to return closer to the banks 2% target before increasing their benchmark rate. By not giving a definitive answer the dollar lost ground across the board, a move that has seen GBP/USD break through $1.59 this morning.

This latest move is excellent news for those of you looking to purchase dollars, converting £200,000 will see you receive over $8000.00 compared to the same trade last week.

I would say that the U.S is still in pole position to raise interest rates first but if the UK can tackle its inflation issue and the U.S. economic recovery starts to falter, the next few months could be very interesting for the GBP/USD cross.

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GBP/USD exchange rates climb to one month high

Good afternoon,

The pound received a massive lift this morning after figures revealed UK unemployment had fallen again, while wage growth had risen to its highest level in nearly four years.

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The unexpected news saw Sterling rise across the board and pushed GBP/USD to its highest level since 15th May. When markets opened this morning GBP/USD was sitting at 1.5632 but after a gaining three quarters of a per cent the currency pair reached the dizzy heights of $1.5752.

The latest move has now seen pound gain around 2.3% against the dollar in the last eight days, climbing from $1.5394 last Wednesday.

 

Good news for the UK economy

This morning's numbers showed the number of people out work had fallen by 43,000 between February and April, keeping the jobless rate at 5.5%. With wage growth climbing 2.7%, the biggest rise we have seen since August 2008 there is finally some positive news for what seemed to be a flagging economy.

What today's data releases have done is also bring the Bank of England back to the table in terms of interest rates. With wage growth rising and unemployment falling the only thing preventing the central bank from increasing their benchmark rate is the current UK inflation level.

It will be interesting to see if Bank of England Governor Mark Carneys drops any hints about interest rates when he speaks this evening, especially after what should be seen as a positive step for the UK economy.

Watch out for the FED.

After a two day meeting the U.S. Federal Reserve will deliver their eagerly anticipated economic projections and statement this evening.

If you are looking to buy or sell dollars it is worth keeping an eye on the announcements as they have the ability to sway the FX markets. While no one is predicting a rate rise this evening there is every chance Janet Yellen could give a definitive timeframe as to when the FOMC could start to act.

Any positive comments could easily wipe away the gains the pound has made during today's session which will be great news for those of you looking to sell dollars.

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GBP/USD exchange rates push towards $1.56

Good afternoon,

Some weaker than forecast U.S Industrial Production numbers helped push GBP/USD rates up today with the currency pair climbing from $1.5488 to 1.5569. The move leaves the cross at its highest level since the 22nd May and means the pound has clawed back almost four cents since the start of the month.

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With talks between Greece and its creditors breaking down after only 45 minutes on Sunday the pound initially dropped against the dollar during the early part of today's session. As we have seen on a number of occasions over the last few months negative news from the troubled Greeks often causes investors to seek the safety of the greenback and this morning was no different.

As markets reacted to the news GBP/USD fell nearly half a cent but with the U.S industrial figures coming in at -0.2% against a predicted level of 0.2% the dollar weakened over the course of the afternoon.

Despite the very brief spike over $1.58 back in May GBP/USD rates are very close to the best we have seen all year. The move we have seen in the last two weeks makes a huge difference to those of you looking to purchase dollars, $200,000 will now cost £3100 less than at the start of the month.

Will GBP/USD continue to rise?

As we have seen in the past month or so things can change very quickly when it comes to the currency markets. This week could see further volatility for the GBP/USD cross as we await the result of the latest Federal Reserve meeting.

Speculation is mounting that Fed Chair Janet Yellen could give a definitive time frame on when the central bank will look to raise interest rates.

Any positive comments from the Fed on Wednesday could see the dollar gain momentum and the gains made by the pound will be quickly wiped away. Some forecasts are suggesting that GBP/USD will be back in the 1.40's during Q3 and this will be based on the Fed starting to raise their benchmark rate in September.

Do you want the best exchange rate?

If you have a requirement to buy or sell dollars in the coming weeks or 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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