Sterling dollar exchange rates fall again!

Good afternoon, today has seen the recent trend continue as the pound lost further ground against the dollar. Trading levels have now dropped back to lows not seen since August as the mid-market price fell back into the $1.57's. This afternoon has seen cable drop another 0.5% and is once again down to sterling weakness. In today's post I will take a look at what we could expect to see for the GBP/USD cross.

Since the turn of the year sterling has been in free fall against a number of currencies, against the dollar we have seen a 3.5% drop in exchange rates, to put that into monetary terms exchanging £200,000 now will see you receive nearly $12,000 less than at the start of the month and with so much negativity surrounding sterling at the moment it is quite possible we could see the rates continue to slide.

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Despite the positive news that UK unemployment levels fell yesterday there was little movement in the currency markets as Prime Minister David Cameron's long awaited speech cast further uncertainty over the UK. Mr Cameron went on to say that if the conservatives are re-elected he will give the people of Britain a choice over the countries future within the euro-zone. Elections are not due to take place for another year and a half which could affect future investment into the country.



Another reason for the sudden drop in exchange rates this afternoon could be down to the UK GDP figures that are due out tomorrow (25th Jan). The currency markets move on rumours as much as facts, so if market players are predicting another quarter of contraction is on the cards, we could well be seeing it being priced into the market already.

If the initial reading confirms that the UK economy did contract for Q4 2012 it will fuel speculation the UK is facing a triple-tip recession and would potentially lead to further loses against the dollar, safe haven flows could increase into the greenback bring rates towards the $1.54 mark we saw in June.




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