GBP/USD weekly roundup

Last week saw the pound fall to its lowest levels against the greenback in seven weeks as continued optimism over the U.S. economy helped boost the dollar. The GBP/USD cross dropped to $1.5603 at the start of the week, the lowest we have seen since the end of January but were mainly due to a stronger dollar rather than a weaker pound. However things were soon to change, as by the end of the week GBP/USD rates had staged a remarkable recovery.

It was another choppy week for the pound as data releases from the UK and U.S started to have more of an effect on rates rather than the recent problems in the Euro zone. Rates broke the $1.57 barrier as news that the UK trade gap was less than expected in January, largely thanks to strong exports of cars to Russia, the US and China.

This was seen as good news for the pound and the UK economy as it shows exports are growing faster than imports and could reduce the chance that the UK will head back into a recession. However, some analysts still believe the pound is vulnerable against the dollar as it is widely expected that the U.S Federal Reserve will hold off from further monetary stimulus for the economy.

The gains were short lived as sterling slipped back after the UK unemployment data release and the news that the Fitch Credit ratings agency has revised Britain’s status to negative from stable, as mentioned in our Euro report. Other UK data showed that the number of people out of work increased by 28,000 to 2.67 million during the three months to January. Again, as outlined in the Euro report, while this was high, it was not as high as expected, hence the Sterling strength it caused.

On Friday we saw another shift in momentum as Sterling hit a one week high against the dollar, softer than expected US inflation and CPI data pushed rates back into the $1.58’s and peaked at $1.5850. It means we have seen a 1.5% rise in the dollar rates over the last 5 days, to put that into perspective a £200,000 trade would see you receive $5,000 more now than at the start of the week.

This is another example of how important timing can be when it comes to exchanging currency, if you need to buy or sell dollars in the next few months click here to send me a direct email or complete the contact form on the homepage of the blog.