Since my post the GBP/USD cross has continued to fall with the currency pair dropping from $1.6880 on Tuesday to a low of $1.6695 today. This will make life a bit more bearable for those of you looking to sell dollars, especially with the way GBP/USD has been performing over the last few months. To put the move we have seen over the past 48 hours into monetary terms, converting $250,000 back into pounds will now see you receive an extra £1640.
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So what has caused the drop in exchange rates?
It all started when Bank of England Governor Mark Carney urged bankers to adopt higher ethical standards at a meeting on Tuesday evening. This is a change in stance from when Mr Carney took over almost a year ago where he said he would do everything possible to help the British banks and news lead to a Sterling sell off when markets opened on Wednesday which in turn weakened the pound across the board.
There were also some positive numbers from the States in the shape of U.S. unemployment claims. The number of people filing for unemployment last week came in at 300K, 21K under the forecast rate had helped maintain the dollar's current position.
It was not all plan sailing for the U.S. today though as figures released this afternoon showed the U.S. economy had shrank by an annualised rate of 1%. The number was much worse than what was forecast as many economists had believed the economy would only contract by 0.5%.
Normally this kind of contraction would lead to a currency weakening, which would have meant the gains made by the dollar over the past two days would have been wiped out.
So why did it not effect the dollar today?
It seems the markets had already taken the contraction into account, the drop in economic output has been blamed on the bad weather that hit the States during the last quarter and could be seen as only a blip. The next few months will be key for the U.S. and all eyes will now be focusing on how the economy performs in quarter two.
If you are thinking of buying or selling dollars in the coming months and want to ensure you are making the most from you transfer there are two ways to get in touch. Either use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.
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