Sterling has continued to rise against the dollar in the last 48 hours following dovish comments from the U.S. Federal Reserve. GBP/USD exchange rates surged last night from $1.6730 to $1.6820 taking the currency pair to its highest level since August 2009. The latest rise in rates mean the cross has now gained over 1.5% in the last seven days making it an extremely attractive time to purchase U.S. dollars.
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What did the FED say?
A couple of weeks ago I mentioned the FED had hinted at an interest rate rise once the on-going stimulus package comes to an end. If the FED continue to taper at their current rate, the bond buying programme will finish in October and the news of a rate hike looked very appealing to investors.
Any chance of a rate rise this year seem to have be scrapped following comments last night. It now looks like the earliest we will see any movement will be the end of 2015. This news lead to investors pulling out of the dollar and looking at alternatives such as Sterling, Yen and Swiss Franc.
The dollar did recover slightly during trading today as better than expected unemployment claims help boost the U.S. economy. Claims fell by 32K from last week but the good news only helped bring the GBP/USD cross back to $1.6775.
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