Sterling had another poor day at the office and fell against the dollar after official figures showed that UK manufacturing output fell by 1.5% for the month of January. Cable dropped from $1.4920 to a low of $1.4832 on the back of the data release and the recent numbers will add to fears the UK is heading towards another recession.
The figures from the Office of National Statistics (ONS) came in much weaker than forecast leaving many economists to believe that this was the final straw for the UK economy and that we have no chance of avoiding the triple-dip.
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Although exchange rates recovered slightly over the course of the day the recent decline now means we have seen a 9% drop against the dollar since January. To put that movement into perspective, a £200,000 trade into dollars will now see you receive nearly $30,000 less than at the start of the year.
The one question on clients lips at the moment is do I think rates will move back up? At the moment the outlook for sterling/dollar does not look great. We may see a slight recovery if the UK does somehow avoid recession but I fear the damage may have already be done by the time the figures are released.
If the UK does fall into its third recession since 2008 I think it is highly likely we will witness exchange rates fall even further. It is widely tipped that we could well see the GBP/USD cross reach a low of $1.40 by the end of the year.
This is great news for anyone selling but if you are looking to buy dollars in the coming months further losses could prove to be very costly. As a currency broker I can offer a range of contracts to help you make the most of currency transfer and protect you from any more adverse market movements.Complete the link below for a free, no-obligation consultation.
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