After another choppy few days sterling finished the week at its strongest level since the 23rd of February reaching a high of $1.5242. Over the last five days we have seen rates move at a drastic pace in both directions following the problems in Cyprus, the Bank of England minutes and the UK budget announcement. In today's post will give an overview of the weeks events that have impacted pound/dollar exchange rates.
The start of the week saw rates gradually decline as markets reacted to the uncertainty surrounding the Cypriot bailout, the original plans to hit bank customers with a one off levy on deposits caused huge demonstrations and has left the Cypriot banks on the edge of insolvency.
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In the past we have seen bailouts for Greece and Spain strengthen the single currency which in turn boosted GBP/USD exchange rates as risk appetite shifted. With the Cyprus government due to vote this evening (Friday) on the terms of the bailout it will be interesting to see how markets react on Monday morning and depending on the result we could see rates move in either direction.
It wasn't until Wednesday that we saw a change in sterling's fortunes, a drop in the number of people claiming Jobseekers Allowance and a positive outcome from the latest UK budget saw sterling rally and claw back over a cent against the greenback throughout the course of trading. Since then the pound has not really looked back and reached the high of $1.5242 late this afternoon (Friday). The gains we have seen this week mean sterling has climbed over 1.5% since Wednesdays lows of $1.5034, to put the gains in monetary terms a £200,000 trade would have seen you receive over $4000.00 more today than the same trade booked on Wednesday morning.
It shows how important it is to get the timing right on your currency transfer as a few days can have a huge impact on cost. The next few weeks will undoubtedly see the volatility continue and I am not the only one to think this way, today a number of our brokers have reviewed their forecast for sterling/dollar with one predicting that we will see rates fall to $1.47 in the next few months.
Whether you are a business or a private client and need to buy or sell dollars in the coming months, holding out to see which way rates will move without knowing what tools are available could prove to be very risky. By clicking on the link below and completing the contact form we can discuss a range of currency contracts to ensure you are protected against any adverse market movements but at the same time target rates that might not be currently available. I can also look to secure your rate of exchange for up to two years into the future so even if you don't need your currency straight away you will have the peace of mind that the cost of your dollars or sterling will not change.
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