It has been a fairly choppy couple of days for the GBP/USD cross with exchanges rates pushing close to $1.61 this morning before dropping back down towards $1.60 by the middle of the afternoon. In todays post we will take a closer look at what has caused the movement and what we can expect in the coming weeks. For more information on live market prices click here.
This morning saw the release of the final Gross Domestic Product (GDP) figures for quarter two of 2013. Figures released by the Office of National Statistics caused little surprise and came in exactly as forecast at 0.7%. Although the figures are positive for the UK economy it did cause a huge amount of movement in the FX markets as I suspect it was already being priced into the market.
Sterling was unable to make the most of the positive GDP result as moments later it emerged that the UK trade balance had widened by £2billion more than had been forecast. The news had a negative impact on the pounds performance over the course of trading today as the graph below shows.
What are the predictions for the pound/dollar forecast?
The next few weeks are going to be critical for the U.S government and the dollar. Over the last few months all of the talk has been about the U.S Federal Reserve and when they will begin tapering, which is one of the reasons we have seen exchange rates break over $1.60 in the last seven days.
That is all about to change though, as it has emerged that the U.S are close to reaching their debt limit and unless President Obama and the Republicans can come to some sort of agreement it will leave the country unable to meet their financial commitments.
If that were to happen it would cause the dollars value to drop even more than it has done in recent weeks which in turn would push GBP/USD exchange rates even higher. However, just to underline how unpredictable the currency markets can be, one of my brokers are still predicting that Sterling/dollar rates will drop below $1.48 in the coming months.
If you are worried about which way exchange rates are heading use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065 (quoting ADM blog) for a free, no-obligation consultation.
