It has been another difficult 48 hours for the pound with sterling continuing its recent downward trend against the dollar. Despite the U.S Federal Reserve indicating there is no rate rise on the horizon and the UK trade deficit narrowing, the pound still managed to lose the ground it made earlier in the week. The GBP/USD cross finished the day below $1.6050, a loss of over a cent during todays trading session.
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Why has the pound weakened?
With UK inflation starting to ease the Bank of England may be in a position to keep interest rates lower for longer, which may have impacted investor confidence. The BoE decided yesterday to keep interest rates at their current level which came as no real surprise. However, in two weeks time the central bank will reveal the result of how the policy committee voted and if the number of members voting for a rate hike increases (two last month) the pound could stage a mini revival.
What next for GBP/USD?
The pound has lost over 7% against the dollar in the last few months and this has been mainly down to dollar strength rather the sterling weakness. If the BoE act before the FED in increasing interest rates we could see the pound fight back but with the results could be minimal, There is every chance a rate rise has already been priced into the market so even if the BoE make the first move I cannot see rates pushing back towards $1.70 in the near future.
What to do next
With the FX market impossible to predict, knowing what tools are available can help you get the timing right on your transaction and make the most from your transfer. If you need to buy or sell dollars in the coming weeks and want to ensure you are getting the best possible rate, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.
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