This morning has seen the pound gain around two cents against the dollar following comments from the Bank of Japan Governor Haruhiko Kuroda. GBP/USD exchange rates have climbed from $1.5275 to $1.5469 to give the pound some much needed breathing space.
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Since the 14th May the pound had been on a downward trend against the dollar with exchange rates falling from $1.5802 to $1.5195, a drop of over 3.75%.
As regular readers will know the U.S. dollar is seen as a safe-haven for investors and with the troubles surrounding Greece, the UK economy underperforming and talk of the U.S. Federal Reserve raising interest rates, the dollar has been able to take full advantage against most of its major counterparts.
So why did the dollar weaken this morning?
The Bank of Japan (BoJ) have been undertaking a huge quantitative easing programme in order to tackle the countries deflation issue which in turn has weakened the Yen. At a meeting last night BoJ Governor Kuroda essentially said enough is enough, the Yen is already very weak.
The announcement caught investors by surprise and prompted a massive dollar sell off, weakening the greenback across the board.
Volatile Markets
With Greece still dominating the headlines the volatility in the FX market is bound to continue in the coming weeks.
If the Greek government can reach an agreement with its creditors we could see investors return to riskier assets such as the euro which in turn could see GBP/USD push back towards the $1.58 level we witnessed last month.
On the other hand, if an agreement cannot be reached and talk of a Greek default resurfaces then the dollar could easily claw back the ground it has lost this morning.
Best GBP/USD exchange rates
If you have a requirement to buy or sell dollars in the coming weeks or months and want to ensure you are getting the best possible rate of exchange, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.
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