Sterling falls to lowest levels for five months

The last 24 hours have been fairly volatile for cable, since yesterdays post GBP/USD rates have fallen to there lowest levels for five months. Last night rates dipped to $1.5807 a level not seen since August 2012 before recovering back just below $1.59. In today's post we will take a look into events that caused this movement and what we can expect over the next few days.

Despite some negative news first thing this morning the pound slowly recovered over the course of the day. Early on saw the latest UK public net borrowing figures released. The Office for National Statistics (ONS) reported that Government borrowing had increased slightly for the month of December and will once again add to the increasing speculation that the UK's prised AAA credit rating could come under threat. If the UK was to have its rating downgrading it could mean sterling will seem less appetising for investors which means the value of the pound could drop against a number of different currencies.

One positive for the UK today was the 10 year bond auction, results were more or less as expected and lent some much needed support to the to the pound. After the auction cable rallied and reached a high of $1.5892 by mid afternoon.

However, the recent climb may be shorted lived, this evening Bank of England (BoE) Governor Sir Mervyn King is due to hold a press conference. In tonight's speech Sir Mervyn will talk about how the BoE view the current UK economy and the value of the pound. His comments can lead to some swings in rates as they may determine a short-term positive or negative trend.

Since the turn of the year cable has been on a downward trend, since the 11th January rates have dropped by nearly 2.2%. This is not all down to Sterling's troubles, the temporary package put together by President Obama to stop the U.S going over the fiscal cliff went a long way to increasing investor appetite for the greenback, but with the official GDP figures for the UK due for release on Friday many analysts believe we could see rates continue to fall.

If you need to buy or sell dollars in the coming months, it is vital you know what tools are available to help you make the most from your currency transfer. With a range of currency contracts available, not only can you secure your rate of exchange for up to two years in advance but also ensure you get the timing right on your transaction. If you haven't done so already click here to complete the contact form for a free, no obligation consultation.