Good afternoon,
Sterling held its ground against the dollar today despite some positive numbers being released from the States. Trading opened this morning with the GBP/USD cross sitting just above $1.6651. However, the pound started to lose some ground as industrial production figures from the States came in 0.4% higher than forecast. The news saw the mid-market rate drop to a daily low of $1.6605, but the dollar was unable to hold onto the gains and by the middle of the afternoon the pound had fought back with GBP/USD rising to $1.6665.
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Todays industrial production figures will once again give the U.S. a glimmer of hope that their economy may be recovering. The Federal Reserve (Fed) were only expecting the industrial production figures to rise by 0.2% today but with the actual number coming in at 0.6% the positive reading is sure to add to speculation that the Fed will look to make further reductions to their bond buying scheme later this week.
The Fed are due to start a two day meeting on Tuesday and their have been hints from some policy makers that another cut to the stimulus programme is on the cards. Over the last few months the Fed have cut $20 billion from the programme which currently stands at $65 billion. Fed Char Janet Yellen recently said the U.S. economy was strong enough to cope with the reductions and if investors agree we could start to see the dollar strengthen.
The next few days are also going to important for the pound. This week sees the UK release its annual budget report along with the latest unemployment figures and Bank of England minutes. I don't think the minutes are going to bring any surprises but if we see another rise in unemployment then the pound could lose some ground as it takes us further from the BoE's target rate.
I will of course keep you posted of the weeks events but in the meantime, if you have a requirement to buy or sell dollars and want to ensure you are making the most from your transfer use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065 for a free, no-obligation consultation
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