Pound/Dollar remains rangebound

Last week saw pound/dollar exchange rates remain relatively stable despite a host of data releases from the U.S, UK and Europe. Following the $1.60 highs we saw before Easter the GBP/USD cross finished the week more or less as it started as the graph below shows.

Pound/dollar rates fell by over a point at the start of the week despite the positive news that UK house prices declined at their slowest pace for 22 months in March. Rates fell to $1.5823 as the dollar once again benefited from the continued uncertainty surrounding the Euro  

The dollar’s gains early in the week were down to a drop in appetite for riskier currencies, recent PMI data from the Euro has indicated a contraction in activity while rising costs to insure Spanish and Italian debt prompted investors to head back across the pond to the safe haven status of the US dollar

Over the last few weeks the pound has been supported by improving construction and manufacturing data and Wednesday’s news that UK retail sales rose for the month of March have added to expectations that the UK will avoid going into recession and that the Bank of England will hold off from further Quantitative Easing. The British Retail Consortium (BRC) announced that like-for-like sales values increased by 1.3% compared to March 2011, the figures provided easily beat predications of a stagnant performance.

Towards the end of the week Sterling started to gain against the US Dollar as Jobless Claims and annual inflation data was worse than expected, weakening the USD and making it cheaper to purchase and, as a result, exchange rates went up. However, the gains were short lived as U.S CPI data (Consumer Price Index) released on Friday afternoon was better than expected and pushed rates back towards the mid $1.58’s.

As we have said before there are a range of forecasts that indicate that pound/dollar rates could fall towards $1.50 over the coming months, mainly due to the continuing problems in the Euro-zone. For this reason it is imperative you stay in contact  as a sudden movement in the market could prove costly. Click here to send me a direct email or complete the contact form on the homepage of the blog.