What has happend to pound/dollar exchange rates over the last 7 days?

Sterling has suffered against the dollar over last week as the continued political uncertainty surrounding the Euro-zone caused rates to fall away from the eight month highs that we recently witnessed. In this weeks dollar report we will take a look at the events that caused the GBP/USD cross to fall to its lowest levels for nearly three weeks.

On Wednesday rates slipped by nearly a cent from $1.6160 to $16070 as analysts and investors tried to predict the results of the Bank of England (BoE) interest rate and quantitative easing (QE) decision. It was forecast that interest rates will remain on hold but there mixed feelings over the QE programme, would the BoE add to the £325 billion that had already been pumped into the UK economy?

The markets waited in anticipation on Thursday morning for the data release, as news broke sterling rallied against the dollar and pushed back to $1.6180. The BoE had kept interest rates on hold and decided not to extend its asset purchasing scheme for the time being, though if the UK continues to move in and out of growth we could see policy maker’s vote in favour of another round of monetary stimulus.

Further gains for cable may be limited over the coming weeks as concerns over the stability of the euro-zone continue. With so much uncertainty hanging over the Greek government, euro-zone chiefs last week held back the latest instalment of the countries bailout package, lending further support to the pound following the Bank of England decision.

However, the gains were short lived as pound fell against the dollar on Friday after JP Morgan (one of the biggest banks in the U.S), reported a $2 billion trading loss,  The news wiped out Thursdays gains as appetite for riskier currencies lowered and caused a flight to safety as investors headed back to the safe haven U.S dollar.   

"The market has reacted negatively to the news JP Morgan has sustained these losses but the market will move on and start focusing on Greece where we are moving towards a second ballot," said Gavin Friend, currency analyst at National Australia Bank.

As we have said before trying to predict which way the market is going to move can be a risky business, trying to squeeze a little bit more from the market could end up costing you thousands of pounds. In the last couple of weeks, pound/dollar rates have dropped by 1.5% from 1.6304 to 1.6062 at the time of writing, this is a difference of nearly $5,000 on a £200,000 trade. So If you are thinking of buying or selling dollars in the next 6 months click here to send me a direct email or complete the contact form on the homepage of the blog to discuss the different options available to you.