GBP/USD exchange rates have remained relatively flat since my last post, after Friday's low of $1.5230 rates fell another 20 pips on the back of the UK credit rating downgrade. However, rates did recover over the course of trading today to reach a high of $1.5230. For more information on the exchange rates I can offer click here.
Credit rating agency Fitch downgraded the UK rating late on Friday to AA+ following recent data which has led to a weaker economic outlook for the UK. The move follows Moody's who were the first agency to act back in February.
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There was no data out of the UK today so sterling was at the mercy of events elsewhere and today's gains for cable were mainly down to some negative figures coming out of the U.S. Existing Home Sales came in lower than forecast and because the housing market is seen as a sensitive area for the American economy it had a adverse affect on greenback and pushed exchange rates up by nearly half a point.
So what will impact exchange rates this week?
To be honest it is a relatively quiet week in terms of data for the UK but probably one of the most important. Tuesday will see the latest Public Sector Borrowing figures released and may cause some movement in the currency markets depending on the result.
Thursday is the key day for the UK as we get the all important Gross Domestic Product (GDP) figures. These figures will determine whether the UK is back in recession and are likely to cause a big movement for the GDP/USD cross. It is safe to say that the UK is currently balanced on a knife edge as early forecasts were for the UK economy to grow by only 0.1%. Thursday's data could quite easily show a contraction and if so will mean the UK is in the dreaded triple-dip.
Did you know
The largest bank notes ever printed in the U.S were $100,000 bills, issued in 1934
To put it in simple terms if the data is positive we could see a big jump in rates but if negative we will see rates fall. If we were to fall into a recession then the knock on effect could see more stimulus from the Bank of England (which would devalue the pound further) and also see a credit rating cut by S&P (the only agency to still give us a AAA rating). The result could see exchange rates fall back below $1.50 with the potential to keep falling.
If you have a requirement to buy or sell dollars in coming weeks then it is more important than ever to know what options are available (especially before Thursday). Use the link below to see how I can protect you from adverse market movements and how I can offer a better exchange rate than you would be able to achieve through your bank.
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