After all of the commotion on Wednesday it has been a relatively quite couple of days for the GBP/USD cross with the currency pair staying with a 20 pip range throughout trading today. Despite the second UK GDP estimate coming out as expected this morning the pound has been unable to recover from Mark Carneys comments earlier in the week and remained under $1.67.
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Weekly summary.
It has been a difficult week for the pound and the dollar has taken full advantage with GBP/USD exchange rates falling to their lowest level in just over four months. This week has seen the pound drop by nearly 1% against the greenback as rates fell from $1.6826 to a low of $1.6665, which means Sterling has now lost almost 3% in the last five weeks alone.
At the start of July we witnessed GBP/USD coming very close to a six year high but since then the pound has almost been in free fall as the UK economic recovery begins to slow. The spare capacity in the UK economy, which Mark Carney talked about on Wednesday, has dampened expectations that an interest rate rise will take place this year and has meant investors and market player have now started to look elsewhere.
So what does this fall mean for my currency purchase?
A 3% drop might not sound like a huge amount but put into monetary terms makes for some grim reading if you are looking to purchase dollars. Had you secured your rate five weeks ago £200,000 would have seen you receive around $343,000, now though, that same £200k will see you receive around $10,000 dollar less.
However, with every negative there must be a positive and for those of you looking at selling dollars the last month will have come as a breath of fresh air. With the UK recovery running out of steam and with the prospect of the U.S. Federal Reserve wrapping up their stimulus programme in the next couple of months we could see the dollar take even more out of the once dominant pound.
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Have a great weekend.
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