With exchange rates sitting around $1.54 for most of the weekend, the GBP/USD cross dipped during trading today with the mid-market price falling to a low of $1.5329. For more information on live market prices click here.
It has been a relatively quite day in terms of data coming out of the UK with the only real data of note coming in the form of UK Mortgage Approvals released first thing this morning. It had been forecast that 59,500 new mortgages were approved in June but the actual figure came in slightly under at 57,667. Mortgage Approvals are seen as a key indicator into how the UK housing market is performing and a low reading can have a negative effect on the pound.
This would have been one of the reasons why we have seen exchange rates drop during business today but another reason would have been the market players and investors turning their attention to the Bank of England (BoE) meeting on Thursday.
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Since Sir Mervyn King stepped down as BoE governor he has left behind a level of uncertainty and it is still unclear as to how his successor Mark Carney is going to tackle the issues currently surrounding the UK economy. Until we get a clear understanding about what Mr Carney and his fellow policymakers plan to do the more damaging it could be for Sterling as investors look to put their money into safer assets.
This has been reflected in some of the long term forecasts I have received from my brokers, with one of them now thinking we will see GBP/USD fall as low as $1.41 within the next 12 months. This is only one brokers view but it shows that despite the UK posting some positive data over the last few months the long term future of the economy is still under threat. If rates were to fall back to $1.41 it would mean a staggering 8% drop from where we are currently sitting and is a difference of $24,600 on a £200,000 trade booked today.
It shows how important it is to get the timing right on your currency transaction because just waiting to see what happens could end up costing you thousands. If you would like more information on how I can help you make the most from your currency requirement click on the link below and complete the contact form for a free, no-obligation consultation.
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