Good afternoon,
It was a quite day in terms of data releases in the UK but that did not stop the pound rising to the highest level we have seen since mid-January. Following the news that Larry Summers has withdrawn from the race to take over from Ben Bernanke at the U.S Federal Reserve the dollar weakened against most of the major currencies and pushing the GBP/USD cross to a high of $1.5961. For more information on live currency prices click here.
Many thought that Larry Summers was President Obamas favourite to succeed current Chairman Ben Bernanke when he steps down from the role in January 2014. It is now leaves the door open for Janet Yellen who is the currently the vice-chairman at the FED to become the first women to be appointed in the role.
Whoever takes over from Mr Bernanke could well be appointed at a critical time for the Federal Reserve, as speculation continues to mount over the current bond buying programme. The question on everybody's lips at the moment is when will the FED look to start scaling back the current programme. There are rumours we could get an answer when the FOMC meet this week but with the U.S economy under performing it seems increasingly unlikely we will see any reduction in the short term. But stranger things have happened!
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If Mr Bernanke does decide to take action it will lead to the dollar clawing back some of the ground it has lost against the pound in the last few weeks. This will be great news for those that are looking to sell dollars as the rates have been moving against them since the start of August. How far exchange rates will fall is impossible to say but given how well the UK and Sterling have been performing lately I doubt we will see rates drop below $1.50.
If the FED decline to take action this week it is only a matter of time until they do. For this reason if you are looking to purchase dollars it is certainly worth considering taking advantage of the gains we have seen in the last month. GBP/USD has gained over 5.5% in the last six weeks, and to put the movement into monetary terms a £200.000 trade will now see you receive around $17,000 dollars more compared to the same trade secured on the 2nd August. Even if you don't need the funds straight away I have a number of currency contracts at my disposal that will help you take advantage of the current levels.
For more information on the contracts I can offer or to discuss the current market prices use the link below and complete the contact form for a free, no-obligation consultation.
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