Retail figures help the pound

Good morning,

The pound lost over two cents against the dollar yesterday following the latest FOMC meeting but did manage to recover some of the lost ground this morning after UK retail sales figures smashed expectations.

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During yesterday's conference Fed Chair Janet Yellen announced the Federal Reserve will would be "patient" when deciding to raise interest rates. Previously the Fed had stated that interest rates would remain low for a considerable amount of time, so this change in stance helped strengthen the dollar, with GBP/USD exchange rates dropping from $1.5777 to a low of $1.5548.

Mrs Yellen went on to stay there would be no immediate rate hike and that being "patient" meant the central bank was unlikely to raise rates for at least a couple of meetings.

Retails figures trigger recovery.

The pound did manage to claw back some of ground it lost last yesterday after UK retails figures rose at their fastest pace in more than a decade. It seems Black Friday helped boost sales in November after figures released by the Office of National Statistics showed sales climbed by 1.6% month on month, the forecast had only been for a 0.3% rise.

The release had an immediate impact on the currency markets with the pound gaining ground against most of its major counterparts. The GBP/USD cross rose almost a cent climbing from $1.5555 to $1.5648 bringing back into the range we have witnessed for the last few trading sessions.

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Bank of England comments help boost the pound

Good afternoon,

The pound had an unexpected boost this morning following a surprise announcement from the Bank of England. The central bank's annual survey of household finances showed that the majority of people with mortgages in the UK would be able to cope if the BoE raised interest rates by 2.5%. The news helped Sterling climb against most of its major counterparts, pushing GBP/USD up nearly a cent from $1.5543 to a high of $1.5642.

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Although today's announcement is a positive sign, it does not mean we are likely to see the BoE raise interest rates in the immediate future, I think the central bank will wait until after the UK elections before taking any action.

What today's announcement has done is remove some of the uncertainty surrounding what kind of impact an interest rate rise will have on the UK economy. This has given investors some added confidence and if the BoE continue to drop hints like today the pound might be able to put a stop to its demise against the dollar.

Since the end of June GBP/USD exchange rates have fallen around 9% and although it's highly unlikely we will see the currency pair push towards $1.70 anytime soon, positive comments from the Bank of England, coupled with some solid economic numbers from the UK could see exchange rates push back towards $1.60.

If you have an upcoming requirement to buy or sell dollars and want to ensure you are making the most from your transfer it is important to know what options are available to you. As a specialist currency broker I have a range of currency contracts at my disposal, by using these tools you can protect yourself against adverse market movements or target a rate that might not be currently available.

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GBP/USD exchange rates suffer after disappointing data.

Good afternoon,

The gains we witnessed yesterday were quickly wiped out during today's trading session as the GDP/USD cross fell nearly a cent after the UK's construction sector expanded at is slowest pace since October 2013.

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The Markits Construction PMI figures, which were released at 9:30 this morning fell to 59.4 from 61.4 in October, causing GBP/USD exchange rates to drop from $1.5731 to $1.5636 over the course of the day.

Although the construction index was comfortably above the 50.0 growth threshold, the upcoming UK elections are starting to cause some uncertain times for the UK economy and it seems business confidence is starting to suffer. If other sectors start to follow suit, the next couple of months could have a severe impact on the value of the pound.

What to look out for tomorrow.

After today's disappointing construction number all eyes will turn to tomorrow as Chancellor George Osborne delivers his Autumn Statement. So why could this impact the currency markets? Well, government spending and borrowing can have a huge impact on the economy, if the government are spending more they generate extra work for contractors which in turn creates extra jobs. If Mr Osbornes comments are positive tomorrow we could see the pound claw back some the ground it lost against some of its major counterparts today.

If you have a requirement to buy or sell dollars in the coming weeks or months and want to ensure you are making the most from your transfer contact me today for a free, no-obligation consultation.

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