The Euro causes investors to head back to the U.S dollar

Monday was a relatively quite day in terms of data releases both in the UK and the U.S; as a result pound/dollar exchange rates remained within a 50 pip range. As I mentioned last week, due to the problems in the euro-zone rates have slipped over the last couple of weeks and this morning hit a low of $1.6055.

The most common question from clients at present seems to be, do you think rates will go up in the next couple of week? It is very hard to predict which way the market will move especially taking into account the global economic crisis. Once again it is Greece taking all the headlines and if they fail to form a coalition government there has been talk of them leaving the Euro and if that happens we could see the GBP/USD cross come under pressure.

The U.S dollar has always been seen as a safe haven currency by investors and the recent uncertainty surrounding the Euro-zone has seen appetite for riskier currencies fall. When investors leave the single currency and head back to the greenback it strengthens the dollar meaning it is more expensive to purchase. This has gone a long way to help those looking to sell dollars as they are currently getting more pounds for their money.

In the UK this week all eyes will be focused onto Wednesdays data releases as this could have some bearing onto the pound/dollar rates. Over the course of the day we will see unemployment data and the Bank of England (BoE) inflation report, with both potentially having an impact onto the value of the pound.

In the U.S  the main data releases are Jobless claims and a FED speech. This could give us an indication on how the U.S economy is fairing and could also cause a swing in rates. I will keep you posted on how the data affects the rates over the coming days,

If you need to buy or sell dollars over the next few weeks click here to send me a direct email or alternatively complete the contact form on the  homepage of the blog.