The last couple of days has seen Sterling lose more ground against the U.S with exchange rates falling to their lowest levels since 24th April. GBP/USD rates fell to $1.5234 which now means the cross has now dropped by over 2% since the 9th May. For more information on exchange rates click here.
With recent talk of the Fed reducing the $85 billion they are currently pumping into the U.S economy we have seen the greenback strengthen massively since last week. Since last Thursday exchange rates have fallen from $1.5580 to their current level ($1.5234) which has had a major impact for those looking to buy U.S dollars. To put the movement into monetary terms a £200,000 trade will now see you receive nearly $7,000 dollars less compared to trade last week.
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It is not only talk of the Fed reducing its current Quantitative Easing (QE) package that has caused the dollar to strengthen, the U.S also witnessed better then forecast Retail Sales figures for April this week. Figures released by the Commerce Department showed that sales rose by 0.1% last month compared to the 0.5% contraction we saw in March which was enough to cause a half point drop in exchange rates on Monday afternoon.
It has been a relatively quite week so far in terms of data releases but that will all change tomorrow. Wednesday brings a number of key releases from the UK and Euro-zone which could all cause some major movements in the currency markets. From the UK we have the latest unemployment figures, a speech from Bank of England (BoE) Governor Mervyn King and the Bank of England Quarterly Inflation report.
Any negativity from the BoE or poor unemployment figures could mean we see exchange rates fall even further tomorrow, saying that if unemployment figures are positive and the BoE don't try and talk the pound down we may see sterling recover some of the lost ground we have seen over the past few days.
However, it is not only events in the UK that could impact exchange rates tomorrow, Europe release their latest GDP figures and the results could quite easily have an impact on the Sterling/dollar cross. A negative result could cause investors to seek the safety of the greenback, which would strengthen the dollar and bring rates down. A positive result may prompt a change in risk appetite, this would see investors leave the safety of the dollar, weaken the currency and mean exchange rates increase.
If you need to buy or sell dollars in the coming weeks knowing what options are available can help make the most from your currency transfer. If you would like to know how you can protect yourself from adverse market movements or how to get the best rates of exchange, use the link below to complete the contact form for a free, no-obligation consultation.
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