Pound/Dollar update

It has been a quiet couple of days for the GBP/USD cross as a lack of data releases from the US has prompted a more stable feeling to the market compared to recent weeks.

We did see a small recovery for the dollar on the back of the announcement that Greece had their credit rating downgraded and the CBI data release in the UK which has shown Britain’s service sector is weakening. This prompted a flight to safety as investors left the UK and single currency.

Despite last week’s announcement that EU ministers agreed to bailout Greece for a second time, rating agency Standard & Poor’s have classified Greek debt as ‘selective default’ on the back of the deal made with their creditors. Greek debt already had a junk rating before yesterday’s news.

Yesterday’s CBI data release has shown Britain’s service sector has weakened, this covered the three months ending the 31^st January. In the report consumer and business services saw a drop in activity, but in both cases it was not as much as first feared.

With forecasts still showing a mixed feeling about the GBP/USD cross it’s important to make sure you have the necessary precautions in place. Depending on where you look you could see predictions for pound/dollar exchange rates ranging from 1.55 to 1.59 for the next 3 months. On a £200,000 trade could mean a difference of 8,000 dollars.

If you need to buy or sell dollars in the coming months click here to send me an email. Alternatively complete the contact form on the home page of the blog and we can discuss the options available to you in more detail.

GBP/USD Exchange Rate Weekly Overview

Last week was relatively quiet in the US after Presidents Day on Monday, but it did not stop it from being another volatile week for the GBP/USD cross as rates swung on the back of news from the UK and Europe. We started the week in the mid $1.58’s but as the week progressed we saw a sudden 1.5% drop as rates fell back into the $1.56’s before slowly recovering. To put this kind of movement into prospective a £200,000 trade would have seen you receive $4000 less on Wednesday than at the start of the week.

As news of the Greek bailout package came to light the GBP/USD cross began to move towards the highs we saw in October. However, Wednesday morning saw the Pound lose ground against the US Dollar as the Bank of England (BoE) minutes were released. In his last speech Sir Mervyn King announced that the bank would inject a further £50bn into the economy through its Quantitative Easing (QE) programme. However data has shown that two of the nine Monetary Policy Committee (MPC) members actually voted for a £75bn boost.

As soon as the data was released we saw rates drop across the board, the GBP/USD reacted by dropping briefly into the $1.56 level before recovering back into the low $1.57’s. With two MPC members voting for further stimulus it shows that some still believe the UK to be on fragile ground and believe the BoE should increase its asset purchasing programme. So far the bank has pumped £325bn into the economy since the UK credit crisis began.

With the recent gains from the from the Greek bailout and the positive data that has come out of the UK (retail sales and public sector borrowing) it shows how quickly the markets can move against you.

As the week progressed, news from Germany that business confidence was at a 7 month high would have given investors added belief that the Euro-zone could be about to turn a corner. When you have positive news coming from Europe investors tend to leave the Safe Haven status of the Greenback and head back into the bloc currency, this will lead to the dollar losing strength and make it cheaper to purchase.

With many analysts still concerned that the Euro is under threat any talk of a Greek default or a Euro recession could see the pound/dollar start to move back towards $1.50 as investors look to protect themselves with a flight to safety. 

With the currency markets being so volatile it is important to keep in touch with your account manager at the Foremost Currency Group to ensure you stay up to speed with the market. If you are buying or selling currency in the next 12 months we can help you make an informed decision to making the most of your currency. Click below to register a free account with us today.

US Dollar update and how to get the most from your currency exchange.

US Dollar update

The dollar opened the day against the pound in the mid $1.56’s. As I mentioned yesterday the BOE minutes saw the pound lose ground against a number of currencies and the data release had a bigger effect on the pound than most had predicted.

Throughout the morning the GBP/USD cross has been slowly recovering, at the time of writing we have seen a 0.5% rise in the rates. News from Germany that business confidence was at a 7 month high would have given investors added belief that the Euro-zone could be about to turn a corner. When you have positive news coming from Europe investors tend to leave the Safe Haven status of the Greenback and head back into Europe, this will lead to the dollar losing strength and make it cheaper to purchase.

However with many analysts still concerned that the Euro is under threat any talk of a Greek default or a Euro recession could see the pound/dollar start to move back towards $1.50 as investors look to protect themselves with a flight to safety. 

With limited data coming out the UK and US today it could be a rather quiet day for the GBP/USD cross. Friday however is a much busier day and we could see some movements in the market, tomorrow will see finance ministers and central bank governors come together to discuss the global economy at the latest G20 meeting.

There is also Gross Domestic Product (GDP) information released from the UK and New Home Sales data from the US.

How to make the most of your currency exchange

If you want to make the most of your currency exchange there are a number of ways I can help. Yesterday I told you about a Stop Loss Order which can protect you from any adverse movements, but what if the rates are moving in the right direction?

With a Limit Order you specify the exchange rate you are hoping to achieve, a price that may not be currently available. Your currency will automatically be purchased if the market exceeds this level and you'll get the rate you wanted.

If you need to buy or sell dollars in the coming weeks or would like to discuss Stop Loss or Limit orders, you can use the contact form on the blog home page or click here to send me a direct email.

What next for Pound/Dollar exchange rates?

Wednesday morning saw the Pound lose ground against the US Dollar as the Bank of England (B0E) minutes were released. In his last speach Sir Mervyn King announced that the bank would inject a further £50bn into the economy through its Quantitative Easing (QE) programme. However, this morning’s data has shown that two of the nine Monetary Policy Committee (MPC) members actually voted for a £75bn boost.

How does this affect the GBP/USD cross?

As soon as the data was released we saw rates drop across the board, the GBP/USD reacted by dropping briefly into the $1.56 level before recovering back into the low $1.57’s. With two MPC members voting for further stimulus it shows that some still believe the UK to be on fragile ground and believe the BoE should increase its asset purchasing programme. So far the bank have pumped £325bn into the economy since the UK credit crisis began.

With the recent gains from the from the Greek bailout and the positive data that has come out of the UK (retail sales and public sector borrowing) it shows how quickly the markets can move against you.

How can I protect myself from falling exchange rates?

There are a number of ways I can look to help you, one of these is with a ‘Stop-Loss’ order. It can limit any losses to you in a falling market yet keep your position open for you to capitalise should the market do the opposite and move in your favour.

What could affect the Dollar today?

After a quiet couple of days in the US we have some data being released in the form of Existing Home Sales.  With the US housing market being considered as a delicate area for the American economy, it tends to generate some movement in the market.

If you are looking to buy or sell dollars in the coming weeks click here to send a no obligation enquiry and I can look to help you make the most from your currency exhange.

How will the Greek bailout affect the Dollar?

After 13 hours of talks EU ministers finally agreed to bailout Greece for a second time. The GBP/USD cross opened the day in the mid $1.58’s (Interbank) on the back of the bailout announcement. With many analysts still predicting that the dollar could drop towards the $1.50 mark within the next 12 months we could see the rates returning towards the lows we saw at the start 2012.

One of the reasons the GBP/USD cross is not a million miles from the highs we saw in October 2011 is down to the improvements in Greece but with other countries still struggling and with the pound seemingly performing better than expected (for no apparent reason) it is unlikely to break the $1.60 mark as . For that reason booking a rate of exchange using a Forward contract can protect you from the predicted adverse movements.

There is no data scheduled to come out of the US for the second day running following Presidents Day yesterday. However in the UK we had the Public Sector Net Borrowing figures released which came back better than expected. For the first time in four years the government received more money than it spent for January. The Bank of England said that we could see the economy ‘Zig-Zag’ in and out of growth this year and so far this seems to be true.

If you need to move Dollars or require any information about sending money overseas click here  to contact me.

Pound Dollar Rate Forecast

Last week saw the volatility continue in the currency markets as the GBP/USD dropped from $1.59 to $1.56 level before recovering back to the high $1.58’s (Interbank).

At the start of last week we saw the pound lose ground against the dollar as the credit rating agency Moody’s threatened to downgrade the UK from its current AAA rating. With poor unemployment figures showing the number of people claiming job seekers allowance was nearly double the predicted figure, this led to Sterling falling back to $1.56 against the Greenback.

Later on in the week we saw a rise in retail sales of 0.9% for January which was better than forecast. We also saw Bank of England Chief Mervyn King make an announcement that interest rates will be kept on hold and that a double dip recession seems unlikely. Mervyn King went on to say that a decrease in inflation has justified the latest round of Quantitative Easing and at present there are no further plans to pump more money into the UK economy. This strengthened the Pound across the board and the GBP/USD pushed back towards the 1.58 region.

With talk of a bailout package being agreed for the Greeks, investors headed back towards the Euro-zone as they left the ‘Safe Haven’ status of the USD behind. As a result the GBP/USD rate finished the week just below the $1.59 level.

Today will have a big impact on the Dollar rates as we wait to hear the result regarding the Greek bailout package. If Ministers agree to the £110bn bailout we could see the dollar weaken further. However many analysts still predict that the GBP/USD could drop to $1.50 within the next 12 months.

To protect yourself from such movements you can book a Forward Contract. This is where you can fix the current exchange rate, even if you don’t need your currency for up to 2 years. You simply fix your rate with us, and lodge a 10% deposit of the total you need to convert. You settle the remaining 90% when you want your currency to be transferred. This way you can budget effectively, safe in the knowledge you have secured rates at a high while being protected against any adverse exchange rates movements.

For further information or to book a forward contract please use the contact form on the left hand side and we will contact you as soon as possible to discuss further.

Last weeks overview of GBP/USD

Last week saw the Pound make steady gains against the Dollar despite fears that Thursday’s announcement of more quantitative easing by the Bank of England would weaken Sterling across the board and drive GBP/USD rates down.

Conversely, Sterling Dollar rates actually climbed half a cent at the time of the announcement as investors saw the Bank of England’s decision as a positive step towards stimulating economic growth.Subsequently, investors moved away from the perceived safe-haven of the US Dollar and into riskier currencies, benefiting the Pound and driving GBP/USD rates upwards.

As has so often been the case recently, it is difficult to comment on the movement of Cable, without mentioning the effect the current Eurozone crisis is having on the currency pairing. In what seems to be a never-ending saga, all eyes were on Greece last week as it was hoped that they would reach an agreement on austerity measures and avoid a disorderly default. The belief that a deal would be struck broadly buoyed riskier currencies, strengthening the Pound and weighing heavily on the safe-haven Greenback, driving Cable up to 1.5929, its highest level since mid - November.

The Bank of England sounded a bit more positive about the UK’s economic prospects last week after better than expected PMI data was released on Thursday. Recent surveys had painted a more positive picture and inflation is expected to undershoot 2 % in the medium term without the need for further adjustments in monetary policy.

The Pound was further boosted after UK industrial data beat forecasts and the trade deficit narrowed more than expected. However, Sterling’s rally proved to be fleeting as GBP/USD rates dropped off sharply on Friday, dropping around a cent over the course of the day, after a reversal in risk sentiment as investors once again moved towards the safe-haven.

"We have a slightly more risk averse environment today but sterling has performed relatively well in the aftermath of QE," said Simon Derrick, head of currency research at Bank of New York Mellon. Analysts said further jitters about Greece would probably push the pound higher against the euro, but put it under pressure against the safe haven dollar. GBP/USD ended the European session last week in the mid $1.57s.