GBP/USD exchange rate forecast for the coming week

After recovering slightly over the early part of this morning's trading session, the pound has once again found itself slipping against the U.S. dollar.

 

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The GBP/USD cross was trading around $1.22 when markets opened in London, but since then the pound has been steadily edging lower against its U.S. counterpart as you can see from the graph below.

GBP/USD graph

Why is the pound falling today?

With talk of the UK's exit from the European Union still weighing heavily on Sterling, markets were thrown another curve ball over the weekend with several media outlets announcing that Bank of England Governor Mark Carney could bring an end to his tenure in 2018.

Despite other newspapers contradicting these theories and saying he will stay on for his full eight year term, investors have been left in limbo and will now be looking towards the Bank of England's meeting on Thursday for some clues.

What could impact GBP/USD this week?

As I mentioned above, the Bank of England will meet on Thursday for what it dubbed "Super Thursday". Along with their interest rate decision, meeting minutes, asset purchase facility and interest rate votes, the central bank will also deliver their quarterly inflation figures.

With the UK inflation figure rising quickly due to a weaker pound and the cost of imports, we could see some changes made to the Bank of England's inflation target. Mr Carney could also announce an interest rate hike is on the horizon to combat the rising inflation figure.

The meeting has the potential to move the GBP/USD cross in either direction, depending on how traders and investors view the banks actions or comments.

Come Thursday afternoon we could easily see the pound trading under $1.20 against the dollar if the comments are seen as negative, while a positive outcome could push the currency pair back towards $1.23.

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Is the pound going to continue to fall against the dollar?

Since my post yesterday morning the pound has been falling against the U.S. dollar. As I predicted, the spike we witnessed after the UK GDP reading didn't last very long, and after climbing to a fresh seven day high of $1.2266 the GBP/USD cross has been in free-fall. At the time of writing GBP/USD is trading at $1.2126 (mid-market)

GBP/USD graph

With the better than expected GDP reading failing to lift investor confidence, it is becoming increasingly obvious that positive economic data is going to have very little impact on the pounds
value.

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The political uncertainty surrounding the UK's exit from the EU looks set to carry on, and until Article 50 is invoked and we get a clearer picture about any potential deal I think the pound will continue to struggle.

Sterling has lost around twenty per cent against the U.S. dollar since the referendum result and I for one would not be surprised if the GBP/USD cross fell even further.

There is a real possibility we could see a fresh thirty-one year low in the coming weeks, especially if the U.S. Federal Reserve increase interest rates before the end of the year.

If the UK government push ahead with a so called "hard Brexit" and the Fed decide to hike rates in December, GBP/USD could finds itself trading around $1.15 in the not to distant future.

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Pound rises against the dollar after GDP reading

The pound has edged higher against the dollar this morning after the latest UK GDP figure beat analysts forecasts.

As I mentioned earlier in the week, investors were waiting for this mornings third quarter reading to see how the UK economy has performed in the first three months after the referendum result.

Many had expected the UK economy to crumble on the back of the Brexit vote, but so far data suggests things are still moving forwards. This mornings GDP reading had been predicted to come at 0.3%, however figures published by the Office for National Statistics at 0930 (BST) this morning showed the economy grew by 0.5%.

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The news gave the pound an immediate boost with the GBP/USD cross rising from $1.2203 to $1.2264 as the graph below shows. The move this morning also means that GBP/USD is now at it highest level since the 20th October.

GBP/USD graph

Will the pound climb any higher?

It is still to early to say, as there is still so much uncertainty surrounding the UK and exit negotiations. Under normal circumstances a positive GDP reading would usually result in a bigger gain for the country's currency, however, the pound is still being weighed down by talk of a hard Brexit and this is unlikely to change any time soon.

After the spike this morning I wouldn't be surprised if we saw the GBP/USD cross settle back around $1.22 within the next couple of hours. In the short term I still believe GBP/USD could lose more ground, especially if the U.S. Federal Reserve raise interest rates before the end of year. A rate hike by the Fed could easily see the pound lose out and could force the currency pair below $1.20.

In the long term I am sure GBP/USD will recover but I cannot be certain of the time frame. Once the UK is standing on its own two feet and the dust settles from years of Brexit negotiations then we could see the pound back over $1.50 against the dollar.

 

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GBP/USD exchange rate back to $1.22

This morning has seen the pound recover the ground it lost against the dollar, with the GBP/USD cross now trading back above $1.2200.

As I mentioned yesterday morning markets were waiting in anticipation for Bank of England Governor Mark Carney's meeting and in the build up to his testimony the pound lost ground across the board.

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Before the meeting investors and traders had thought Mr Carney would use the opportunity to hint at further rate cuts or added stimulus, as a result GBP/USD rates fell over one per to a low of $1.2086 as you can see from the graph below.

GBP/USD graph

 

So why has the pound recovered?

The pounds rise was prompted by Mark Carney, when he stated the Bank of England will not ignore the fall sterling has sustained since Britain's vote to leave the European Union.

He stated there were limits to the banks ability to overlook the recent decline and they would have to take it into account at their rate meeting next week.

These comments have all but ruled out another rate cut from the central bank, especially as the UK's inflation figure is on the rise. It would seem the markets are now taking the view that Mark Carney & Co could actually start to raise rates in the near future in order to combat the rise in inflation.

A rate hike would be seen as welcome boost for the pound and could prompt a recovery for all Sterling crosses.

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Will the GBP/USD exchange rate lose more ground today?

The GBP/USD cross has remained relatively range bound for the past few sessions but could we see the pound lose ground against the dollar later this afternoon?

Since Friday the GBP/USD cross has been bouncing between $1.22 and $1.2250, giving the indication the pound has found some much needed support. However, with Brexit talk still weighing heavily on sterling we could easily see the pound edge back to the lows we have witnessed over the past few weeks.

GBP/USD graph

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We could see further evidence of this later this afternoon as markets turn their attention to Bank of England Governor Mark Carny. Mr Carney is due to appear in front of the House of Lords Economic Committee at 15:35 (GMT), to talk over the economic concerns of Britain's vote to leave the European Union.

The discussions have the ability to unsettle sterling as Mr Carney could take the opportunity to pave the way for further monetary easing. Since last week's rise to the UK's inflation figure investors have started to price out another rate cut from the Bank of England, but if Carney takes a dovish stance this afternoon we could see traders reverse those positions, which in turn could force the pound lower across the board.

If Carney hints at further stimulus or another rate cut in the near future then it is likely we will see the pound give up some of the ground it has made against dollar, and we could easily see the currency pair drop below $1.21.

 

Do you have any upcoming requirement?

If you are looking to buy or sell dollars in the coming weeks and are worried about the impact Brexit negotiations could have on your transfer, contact me today for a free, no-obligation currency consultation.

As a specialist in currency exchange, I have a wide range of tools at my disposal to help protect you against adverse market movements or target a rate of exchange that might not be currently available.

For more information about how I can help or to find out what rate of exchange I can offer, click here or call me directly on 0044 (0) 1442 892 065.

 

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GBP/USD exchange rate holding around $1.22

Although the GBP/USD cross has fallen away from the eight day high we witnessed on Wednesday last week, the currency pair has held around the $1.22 mark for the past couple of trading sessions.

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Over the last few weeks the pounds value has been battered as investors focus on the impact a "hard" Brexit could have on the UK economy. With the political issues outweighing the positive economic numbers the UK has been producing, any gains the pound has made have been severely hampered.

Since the referendum result the GBP/USD cross has shed nearly twenty per cent of its value, with exchange rates falling from $1.50 to around $1.20 a couple of weeks ago.

GBP/USD three month graph

Obviously this does not make very pleasant reading for anyone looking to convert sterling into U.S. dollars. However, with every negative there is a positive and the decline since the 23rd June is excellent news for anyone looking at buying pounds.

If we look at the move in monetary terms, converting $300,000 back into sterling will now see you receive nearly £46,000 more compared to the same trade before the referendum result.

With a lack of eco-stats coming from the UK this week, it is likely any major moves for the GBP/USD cross will result from events in the U.S. or on the back of further Brexit talk.

If investors are looking for signs about how the UK economy is performing, then I imagine they will be focusing on Thursday's preliminary third quarter Gross Domestic Product (GDP) reading.

After a positive second quarter, Thursday's report will give us the first reading of how Britain's economy has performed in the immediate aftermath of the June's exit vote.

Although the UK economy is expected to slow, the figures released over the last three months have suggested the economy has been holding up reasonably well. Economists are predicting the GDP reading will come in at 0.3%, but if the figure comes in higher then it could give the pound a much needed boost.

Do you need to buy or sell dollars?

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

As a specialist in currency exchange, I have a wide range of tools at my disposal to help protect you against adverse market movements or target a rate of exchange that might not be currently available.

For more information about how I can help or to find out what rate of exchange I can offer, click here or call me directly on 0044 (0) 1442 892 065.

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Why has the pound lost ground against the dollar?

Since my post yesterday morning the pound has continued to lose ground against the U.S. dollar, with the GBP/USD cross now trading just above $1.2220.

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The pound has given up around half a cent against the dollar since midnight, with investors taking the view that Theresa May's hard Brexit approach is likely to hurt the UK economy.

GBP/USD graph

What would a hard Brexit mean for the pound?

If Theresa May and the UK government push ahead with their hardball approach it is likely to create even more uncertainty for the economy. The major concern for investors at the moment is that Theresa May looks like she wants to give up access to the single market in order to focus on immigration controls.

Giving up access to the single market could have disastrous consequences on the UK's financial sector, which is currently viewed as the financial hub of Europe and also makes up around 15% of the country's economic output.

The sector relies on the single market and its financial passports and giving up access could see companies leave the UK and head towards mainland Europe as they would be unable to trade freely.  This in turn would then cause a huge drop in investment flows that would then impact the UK's current account deficit.

 

How far could GBP/USD fall?

I still don't think we have seen the worst for GBP/USD yet. I for one would not be surprised if we saw the currency pair fall below $1.20 before the end of the year, and push towards $1.15 as we approach the government triggering Article 50.

Do you need to buy or sell dollars?

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

As a specialist in currency exchange, I have a wide range of tools at my disposal to help protect you against adverse market movements or target a rate of exchange that might not be currently available.

For more information about how I can help or to find out what rate of exchange I can offer, click here  or call me directly on 0044 (0) 1442 892 065.

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GBP/USD forecast and update

The pound has given up some of the ground it made against the dollar yesterday with the currency pair falling back below $1.23.

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After rising to an eight day high of $1.2324 yesterday afternoon, the GBP/USD cross has fallen around half a cent and is currently trading at $1.2267.

GBP/USD graph

The pounds value has dipped after data published this morning showed UK retail sales were down in September.  According to the Office for National Statistics (ONS) shoppers held off from purchasing last month, with figures suggesting weak sales of clothing, footwear and food.

The amount of goods purchased remained flat compared to August but the pound lost ground as economists had predicted a rise from 0.0% to 0.3%.

It is thought the warmer weather in September is to blame for the lack of sales, but some analysts are worried the falling pound and a rising inflation figure could start to impact future trade.

Watch out for the ECB.

Later on today the European Central Bank (ECB) will be holding a press conference, which could end up effecting the GBP/USD cross. A few weeks ago the ECB hinted they could start to unwind their stimulus programme which is due to expire in March.

If President Mario Draghi confirms the central bank will start to cut the amount of money they are currently pumping into the Eurozone, we could see the euro strengthen which in turn could see the dollar weaken.

It could also have the opposite effect, if the ECB start to back track we could see the dollar strengthen as investors turn their attention back to the safe-haven currency.

Are you thinking of buying or selling dollars?

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

As a specialist in currency exchange, I have a wide range of tools at my disposal to help protect you against adverse market movements or target a rate of exchange that might not be currently available.

For more information about how I can help or to find out what rate of exchange I can offer, click here or call me directly on 0044 (0) 1442 892 065.

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GBP/USD exchange rate hits an eight day high

This morning has seen the GBP/USD cross rise to its highest level in eight days with the currency pair hitting $1.2324, as you can see from the graph below.

GBP/USD graph

The pound rose after a lawyer for the UK government said that parliament would need to ratify any type of deal to remove Britain from the European Union.

The lawyer representing the government, James Eadie, is currently undertaking a the High Court challenge over who has the rights to trigger Article 50 and begin official divorce proceedings. Mr Eadie said yesterday that parliament and not just the Conservative party would ''very likely'' have to approve any exit agreement.  

His comments have given Sterling a small boost and even allowed the pound to shake of news that job creation had slowed slightly in the three months to August.  It would seem the markets are looking past the jobs data, as the numbers have shown very little has changed in the labour market since the referendum result in June.

 

Is this the start of the pounds recovery?

I think it is unlikely, although yesterday's comments have given the pound some support, I don't think it is the start of a sterling rally.

The markets are still concerned over the impact a hard Brexit will have on the UK economy. Unless the courts rule that parliament have to approve the triggering of Article 50, I think the pound will continue to be dragged down by the uncertainty over the UK's exit.

The general feeling is that the pound will continue to fall and the rise we have witnessed over the past twenty-four hours is only temporary. What the rise could do, is give investors an opportunity to restock their selling positions and if triggered could spark another huge sterling sell-off, just like the flash crash we saw a couple of weeks ago.

Do you have an upcoming requirement?

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As a specialist in currency exchange, I have a wide range of tools at my disposal to help protect you against adverse market movements or target a rate of exchange that might not be currently available.

For more information about how I can help or to find out what rate of exchange I can offer, complete the contact form on the right hand side of the page or call me directly on 0044 (0) 1442 892 065.

GBP/USD on the rise

The GBP/USD cross has risen over a cent since yesterday afternoon, with the currency pair hitting a high of $1.2294 this morning as you can see from the graph below. In today's post I will look at the events have impacted the value of the currency pair.

GBP/USD graph

Will the Federal Reserve raise interest rates again?

Investors have been asking this very question since the Fed raised interest rates last December. Despite the U.S central bank initially stating they would raise rates four times during 2016, ten months have passed and we are still waiting for that second hike.

The dollar has given up some ground over the past twenty-four hours as investors ponder the Fed’s near-term rate view. Although a rate hike in December is still on the cards, it is still far from a done deal with Fed Vice Chairman Fischer stating yesterday it was 'not that simple' for the Fed to hike rates.

 

UK inflation figure helps give the pound a boost.

 

This morning has seen the UK inflation reading rise to 1% and has given the pound a fraction of support. The inflation reading beat expectations and the current level is the highest rate since November 2014 and is now half way to the Bank of England's target level of 2%.

 

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GBP/USD drops below $1.22.

The GBP/USD exchange rate has fallen over half a cent so far today, with the currency pair dropping back to $1.2139 this afternoon.

GBP/USD graph

 

After hovering around the $1.22 during Thursday and Friday’s trading session, the pound has found itself on the back foot today after reports emerged about a potential rift within the Conservative Party.

According to The Daily Telegraph, Chancellor Phillip Hammond is on brink of quitting his post after he was excluded from government meetings for criticising Theresa May’s ‘Hard’ Brexit approach.

Despite the Treasury moving quickly to deny the claim, it has done little to lift the mood of investors and is likely create further uncertainty about the UK’s exit from the European Union.

Since the referendum result the GBP/USD cross has been in free fall, with the pound losing nearly twenty per cent against the dollar since 23^rd June.

The recent decline does not make very good reading from those of you looking a purchasing dollars, but for those that are selling it represents an excellent opportunity.

With GBP/USD at its lowest level since 1985, it is now an excellent time to repatriate funds back to the UK. If we look at the move in monetary terms, converting $300,000 back into Sterling will now see you receive almost £46,000 more compared to same transfer in June.

Will the GBP/USD exchange rate improve?

Over time I think it will but I still have a feeling things could get worse for the pound. Although the market has started to price in a ‘Hard’ Brexit, we also have to remember events in the U.S. will also have an impact on the value of the cross.

It is looking more and more likely the U.S. Federal Reserve will raise interest rates again before the end of the year, and if they do we will probably see the dollar strengthen.

It is impossible to say how far GBP/USD will fall but I would not be surprised if we see the currency pair dip below $1.20 before the end of the year.

Do you need to buy or sell dollars?

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

As a specialist in currency exchange I have a number of tools at my disposal to help you maximise the return of your transfer or protect you against adverse market movements.

For more information about how I can help or to find out what rate I can offer, complete the contact form on the right-hand side of the page or call me directly on 0044 (0) 1442 892 065.

GBP/USD exchange rate update

The GBP/USD cross has held around $1.22 for the second consecutive day, but fears over the future of the UK economy and the continued uncertainty surrounding the UK's exit from the European Union means the pound looks likely to struggle for the foreseeable future.

GBP/USD daily graph

 

 

 

 

 

 

Although the pound has edged away from the lows we witnessed last week, I don’t think this is the start of a Sterling rally. The pound is still being weighed down by concerns over Britain’s exit from the EU and the uncertainty is likely to increase in the build up to the Government triggering Article 50.

Yesterday's High Court hearing was a bid to give lawmakers more say over the countries exit, but with the timing and content still unclear, it is forcing investors to stay clear of the pound.

While the uncertainty remains it will be almost impossible for the pound to find any support and we could see the value of the pound fall even further in the coming months. Some forecasts are predicting the GBP/USD will fall as low as $1.15 by the end of 2016, with some banks suggesting we could even see the currency pair hit parity by March 2017.

I actually think parity is a little far-fetched, we have to remember the UK economy is still growing and continues to show its resilient side. Since the referendum result in June investors have been relentlessly selling off the pound but in my opinion they have oversold and is currently massively undervalued.

If we see the High court rule that Theresa May cannot trigger Article 50 without consulting Parliament then it could give the pound a huge boost. The issue for investors steamed from Theresa May's speech a few of weeks ago, when she said she would be pushing ahead with a “hard Brexit”.

A "hard Brexit" would see Britain give up access to the single market and investors believe it will have a severe impact of the future of the UK economy. However, if Theresa May is made to discuss the different options with her fellow lawmakers, it could lead to a softer approach to leaving the EU, and could see the pound regain some of the ground it has lost since the 23rd June.

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