It seems Sterling's recent push against the dollar has started to run out steam. After reaching a high of $1.7170 the pound has gradually slipped against the greenback during trading today, with the GBP/USD cross dropping to a low of $1.7112.
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So why have exchange rates dropped.
It looks like the potential interest rate hike in the UK has now been priced into the market. I still think we will see the first move coming from the Bank of England but over the past few days there has been growing speculation that the U.S. Federal Reserve will have to look at raising rates as well.
This has given the dollar some much needed support and has been highlighted in one of the forecasts I received this morning. The short term projection was relatively unchanged with GBP/USD increasing slightly, pushing towards $1.73 in the next few months. The big change came from the long term forecast, it showed the GBP/USD exchange rates would be down towards $1.60 within twelve months, excellent news for those of you selling dollars!
This shows that analysts and market players are expecting the dollar to lead a fight back as the FED continue to wind up their stimulus package and calls for a rate hike increase.
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