Pound/dollar weekly overview.

After a slow start, Sterling finished the week just over 1% higher against the US dollar. At the time of writing, cable was pushing back towards the $1.57 mark peaking at 1.5695 to reach the currency pairings highest level for seven days. In this weeks report we will take a closer look into the events that affected the pound/dollar cross.

  

Early in week rates fell back to $1.5565 due to safe haven flows as investors looked towards the EU summit where they expected the European Central Bank (ECB) would need to ease policy if leaders failed to make progress in tackling the growing euro-zone debt crisis. When investors pull out of the single currency and head back to the greenback it strengthens the US dollar making it more expensive to buy, this is good news for anyone looking to sell dollars but goes against those looking to buy.

Rates remained relatively flat through the middle of the week despite some positive news for the UK economy. On Wednesday UK retail sales came in higher than forecast, figures showed that sales has leapt at their fastest rate in 18 months for the month of June as the country splashed out during the Queens Jubilee celebrations.

The data did little to strengthen the pounds value following comments made by Bank of England (BoE) chief Sir Mervyn King. Britain’s economic outlook has worsened due to the deepening euro-zone crisis, raising expectations that Bank of England policymakers will look at another round of quantitative easing at their meeting next week.

On Thursday sterling/dollar rates dropped to $1.5520, their lowest levels for two weeks. This followed an announcement by the Office of National Statistics that confirmed the UK was stuck in a recession and again increasing the possibilities of further monetary stimulus by the BoE. However, some analysts believe further QE could already be priced into the currency market and that another cash injection into the UK economy could be seen pre-emptive move and lead to sterling gaining strength against the USD and Euro.

The drop was short lived as the pound recovered over the course of Friday to push rates back towards the $1.57 mentioned earlier. The cause was down to European leaders agreeing to try and cap the borrowing costs of weaker euro-zone countries and creating a single supervisory body for the euro-zone banks. The outcome of the summit came as surprise and led to increased appetite for riskier currencies such as the euro and sterling.

With so much uncertainty still surrounding the currency markets it is important to stay in contact. If you are looking at buying or selling dollars in the coming months it is vital you are aware and understand what options are available so you can make the most from your currency transaction. Click here to send me a no obligatin enquiry to discuss in more detail.

GBP/USD weekly overview

Last week before the election results were announced, it was fairly uneventful as rates stayed relatively stable compared to the recent volatility, with rates staying around the 1.5450 to 1.56 level on the mid-market. 

 Pound/dollar rates remained relatively flat throughout the week despite a number of poor data releases coming from the U.S. Rates held above $1.55 with investors still concerned over issues surrounding the euro-zone and the potential knock on effect it could have on the UK economy.

The dollar is still seen as the currency of choice for investors despite U.S consumer prices falling by 0.3% in May. Figures showed that a drop in petrol prices was behind the biggest monthly fall in over three years, coupled with the rise in Initial and Continuing Jobless Claims and last Wednesdays fall in Retail Sales there has been added speculation that further monetary stimulus could be around the corner to help the faltering U.S economy.

 
 A significant announcement last Thursday evening was from BoE chief Mervyn King caused the pound to fall sharply against a basket of currencies as the market reacted to his speech. Before the announcement pound dollar rates were sitting at $1.5560 but as the UK markets opened on Friday morning there was sharp decline as cable fell back to $1.5475. This recovered through the day however, breaking back into the $1.56’s as markets decided the pre-emptive move was positive for the UK

King announced that the BoE will launch two new stimulus packages in response to the UK and Global economic outlook. The BoE and government will make billions of pounds of cheap credit available to banks which they can lend to companies. This weakened the value of sterling making it cheaper to purchase which is why we saw a drop in rates across the board.

Over the past couple of weeks we have seen some major movements for the pound/dollar cross, in the space of a few weeks we saw rates drop by nearly 6.5%, as issues in the Euro-zone meant investors headed back to the safe haven U.S dollar.

With much uncertainty continuing to drive exchange rates, contact me today to discuss how to minimise the impact of adverse movements. If you are not yet registered, click here to send me free enquiry.

Why has sterling fallen this morning?

Good morning. The pound fell sharply against a basket of currencies on Friday morning as the market reacted to Bank of England (BoE) Chief Mervyn King’s speech on Thursday evening. Before the announcement pound dollar rates were sitting at $1.5560 but as the UK markets opened this morning there was sharp decline as cable (GBP/USD cross) fell back to $1.5475.

At 8pm yesterday evening Sir Mervyn King announced the BoE will launch two new stimulus packages in response to the UK and Global economic outlook. The BoE and government will make billions of pounds of cheap credit available to banks which they can lend to companies. This has weakened the value of sterling making it cheaper to purchase which is why we have seen a drop in rates across the board.

The move gives the UK banks access to money which will allow them to cope with “exceptional market stresses” and according to Chancellor George Osborne these new measures should “inject confidence”. His comments seem to be correct as a number of banks saw a rise in share prices, with one bank seeing a jump of nearly 4%.

In his speech Sir Mervyn said ''The other effect of the euro-area crisis has been to create a large black cloud of uncertainty hanging over our economy too''

With the Greek election result due over the weekend we could see rates move in either direction. No one is sure which way the vote will go and if Greece intends to stay in the Euro-zone. The move by the Bank of England could be a way of protecting the UK banks and economy from the knock on effects of the weekend’s results.

Over the past couple of weeks we have seen some major movements for the pound/dollar cross, in the space of a few weeks we saw rates drop by nearly 6.5%, as issues in the Euro-zone meant investors headed back to the safe haven U.S dollar. If the weekend results indicate anything but positive news it is likely we could see rates fall back even further.

If you nee to buy or sell dollars in the coming weeks click here to send me free enquiry and take the next step to making the most from your currency transaction.

Rates remain flat as investors wait for election results

Pound/dollar rates remained relatively flat on Thursday despite a string of poor data coming from the U.S. Rates held above $1.55 with investors still concerned over issues surrounding the euro-zone and the potential knock on effect it could have on the UK economy. 

With investors waiting for the Greek election results on Saturday the U.S dollar is still seen as the currency of choice despite U.S consumer prices falling by 0.3% in May. Figures showed that a drop in petrol prices was behind the biggest monthly fall in over three years, coupled with the rise in Initial and Continuing Jobless Claims and Wednesdays fall in Retail Sales there has been added speculation that further monetary stimulus could be around the corner to help the faltering U.S economy.

Later this evening Bank of England (BoE) Chairman Mervyn King is due to give a speech on how the BoE view the current UK economy and the value of the GBP. Depending on the tone of the meeting it could lead to some movement in the currency markets.

This weekend could have a major impact on exchange rates and the future of the Euro and depending on the outcome we could see the GBP/USD cross move in either direction. If you need to buy or sell dollars in the next couple of days it is important you know what options are available to protect yourself from adverse movements. Click here to send me a no obligation enquiry and we discuss the options to make the most from your currency transfer.

Will we see GBP/USD dollar rates fall after the Greek elections?

Wednesday saw sterling shrug off some poor data to hold its ground against the U.S dollar. Rates held around the mid $1.55 mark despite a surprise drop in UK manufacturing output for April, but analysts still fear rates could fall away after this weekends Greek elections.

The manufacturing data released this morning (Wednesday) will have fuelled speculation that more quantitative easing is around the corner. Factory output fell by 0.7% in April following a rise of 0.9% in March and was worse than originally forecast, potentially impacting growth in the UK for the second quarter which may prompt Bank of England (BoE) policymakers to consider further stimulus through its asset purchasing scheme.

If the Bank of England add to the £325 billion already pumped into the UK economy sterling could drop against a number of currencies as the value of the pound falls. Investors will see it as a negative move and would see the U.S dollar as a safer option which will drive GBP/USD dollar rates down.

We may see the dollar gain strength over the coming days as the problems surrounding Greece reach a crossroads. This weekend sees the results of the Greek elections and a victory for the anti-bailout party could cause chaos, it could prompt a Euro-zone exit for the Greeks and leave investors flocking back to the safe haven greenback.

With so much uncertainty surrounding the currency markets, knowing all your options could potentially save you thousands of pounds. Clickhere and complete the contact form to send me a no obligation enquiry and take the next step in making the most from your currency transfer.

GBP/USD rates climb on the back of Spanish bailout

Sterling continued to move further away from its recent lows against the dollar as a bailout for the Spanish banks increased appetite for riskier currencies. Pound/dollar rates hit a high of $1.5579 on Monday climbing up from the $1.52 we saw a couple of weeks ago. 

With Spain having their credit rating cut last week and the growing concerns over the banking sector there was added speculation that a bailout could be on the cards. On Saturday euro-zone chiefs agreed a €100 billion rescue package for the troubled banks, this caused a flight from safety as investors left the safe haven U.S dollar and headed back to the single currency, weakening the greenback and driving the GBP/USD cross back towards $1.56.

However, many see the latest bailout as a short term solution for the troubled Euro, it is still unclear what the terms for the bailout will be and with the Greek elections approaching this weekend many investors will still be concerned about the long term future of the euro-zone. Saturday’s votes could push rates either way and no one is sure which way the markets will move.

Sterlings gains against the dollar could be short lived if the anti-bailout party are victorious at the weekend. A victory could see Greece leave the Euro and with the UK’s exposure it could force the Bank of England to consider another round of quantitative easing.

If you need to buy or sell dollars in the coming weeks click here to send me a no obligation enquiry and we can discuss the different options that are available. That way you can protect yourself from any adverse market movements and have the piece of mind to know you have made the most from your currency transaction.

Sterling continues to rise against the dollar as the Bank of England keep QE on hold

Sterling continued its recent rise against the U.S dollar on Thursday after the Bank of England (BoE) kept interest rates on hold and not extend their asset purchasing scheme. Rates climbed by over 1% from $1.5433 to $1.5596 as the GBP/USD looks to have put an end to its recent declines.

Some had feared (including myself) that the Bank of England announcement would lead to another round of quantitative easing which would have potentially led to cable falling back towards the $1.52 mark witnessed last week. When the BoE pump money into the economy it reduces the value of the pound and becomes cheaper to purchase.

The result may have been different had the UK’s services sector data not come in higher than forecast. The Markit/CIPS purchasing managers’ index released early in the day showed the sector had grown at a steady pace for May, coming in at 53.3 after a reading of 52.2 had been predicted. In two weeks time the minutes from the meeting will be released and will show how policymakers voted, last month saw an 8 -1 vote in favour of no QE, a closer vote may cause further unrest and could have an effect on exchange rates.

Over in the states Fed Chairman Ben Bernanke is due to give testimony to U.S Congress today (Thursday). Investors will be taking note of the meeting as Mr Bernanke may give an indication into the Feds thoughts on monetary stimulus for the U.S economy. Any talk of QE in the states could mean sterling making further gains against the dollar and moving away from the recent lows.

Today is another indication of just how volatile the markets can be and how speculation can affect exchange rates. If you are thinking of buying or selling dollars in the coming week click here to send me a no obligation enquiry and take the next step to making the most of your currency transaction.

Sterling rises against the dollar after QE talk in the U.S

After the recent declines sterling clawed back some ground against the US dollar on Wednesday. Rates climbed back over $1.55 and reached a high of $1.5512, moving away from the five month low witnessed last week following a run of poor data from the UK.

There was very little from the UK in terms of data releases on Wednesday as markets re-opened following the extended bank holiday. Sterling rose against the greenback largely thanks to comments made by Dennis Lockhart (Atlanta Federal Reserve President). His comments added to speculation that more quantitative easing could be on the cards to boost the U.S economy.

Tomorrow (Thursday) all eyes will once again be focused on the Bank of England (BoE) as they release their interest rate decision. It is widely expected the bank will keep interest rates and quantitative easing (QE) on hold, but following last weeks disastrous manufacturing data it is possible further stimulus could be on the horizon. If QE is put on hold it will be interesting to see how policy makers voted when the minutes are released in a couple of week’s time, especially as some policymakers were ‘finely balanced’ after last months vote.

If you need to buy or sell dollars in the coming weeks it is important to understand what options are available in order to protect yourself during these volatile times. Click here to send me a direct email or complete the contact form on the homepage of the blog for a no obligation consultation.

Sterling falls to its lowest levels since January 2012

Last week was a dramatic one in the markets with the GBP/USD rate shedding around six cents in a week.

Throughout last week the dollar strengthened against the pound ending the session around a four and a half month low. More talk of a Greek exit from the Euro-zone and a lacklustre response to the fiscal crisis in Europe is weighing on the pound, which had a miserable May, losing ground against the surging US dollar.

In the US, consumer confidence fell to its lowest levels in eight months as fears over the global economy caused unrest. The Consumer Confidence Index fell from 68.7 in April to 64.9 its lowest levels since October 2011. Consumer spending currently makes up around 70% of the U.S economy activity so the figures are watched closely, but even with the announcement the dollar continued to gain strength over the course of the day.

A run of positive UK data midweek could not save sterling from falling to its lowest levels for a long time. Worries over Spain’s rising borrowing costs and banking sector once again caused the value of the greenback to increase as investors headed back to the safe haven dollar.

Last Friday data showed that British manufacturing activity shrank at its fastest pace in three years in May as a broad-based global economic slowdown hit demand for British goods.  This weakened the pound heavily and saw fresh lows for the currency pairing. 

Also on Friday the hotly awaited non-farm payroll figures were released, American employers in May added the fewest workers in a year and the unemployment rate unexpectedly increased as job-seekers re-entered the workforce, further evidence that the labour-market recovery is stalling.  There was not much of a reaction to the figures but as soon as the US markets opened, Greenback weakened against Sterling and rates pushed up higher.

It is a brave person who waits for the rates to move in their favour.  With so much uncertainty it is important to try and stay ahead of the market and protect yourself against any adverse movements, send me a direct email by clicking here or complete the contact form on the homepage of the blog.I can then help you make an informed decision as to when you make your move and make the most from your currency transaction.