After a brief recovery which saw exchange rates reach $1.5279, sterling continued it's recent trend and slipped further against the U.S dollar. Following some weak UK data this morning GBP/USD rates dropped to a low of $1.5113 which means we have seen a 1% decline in the last 24 hours. For more information on the exchange rates I can offer click here.
The main driving force behind today's decline can be put down to a surprise fall in UK inflation. Figures released by the Office of National Statistics showed inflation fell to 2.4% in April from 2.8% in March and could prompt the Bank of England (BoE) to look into ways to help boost the UK economy. This mornings news led to the pound losing ground against a basket of currencies with the pound/dollar cross falling to it's lowest levels since the 3rd of April.
There is also the potential for further movement tomorrow as Wednesday is another important day for the UK in terms of data. In the morning the BoE release the minutes from their latest meeting, they always tend to cause some movement in the FX markets as it gives us an insight to how policymakers voted in terms of more Quantitative Easing (QE).
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Over the last few months three out of the nine MPC members have voted for more QE and if tomorrows minutes show a change in attitude we could see the exchange rates move in either direction. If the voting shows a fourth member wanted further stimulus for the UK we could see the pound lose more ground but if the vote stayed at three or reduces then the pound could claw back some of the losses we have seen today.
There are still a number of forecasts that are predicting that we will see exchange rates drop even further, with some predicting we could see cable fall as low as $1.47 in the next three months. A run of poor data from the UK or an announcement from the U.S that they have cut back on the amount they are pumping into their economy could well see rates fall back to the lows we saw at the begining of March.
If you are a business or private client looking to buy or sell dollars in the coming weeks or months removing the risk element from your currency transfer could potentially save you thousands. With a number of currency contracts at my disposal I can help you target a rate of exchange that may not be currently available or protect you against any adverse market movements. If you would like more information on how I can help or would like to know what exchange rates I can offer use the link below to complete the contact form for a free, no-obligation consultation.
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