Over the course of this morning we saw the pound give up the ground it made against the U.S. dollar throughout yesterday's trading session, with the GBP/USD cross falling over three quarters of a cent from $1.2480 to $1.2402.
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The pound fell against the dollar as markets braced themselves for the Bank of England inflation report hearing, with Governor Mark Carney and a number of the Monetary Policy Committee (MPC) testifying in front of the Treasury Select Committee.
However, the dip for Sterling has been short-lived, as this afternoon has seen the GBP/USD cross recover, rising back above $1.2470.
GBP/USD graph
Will GBP/USD go up or down?
It is a question I have been asked repeatedly over the last few months and a lot will depend on how markets react to Theresa May triggering Article 50.
I have been hearing from multiple sources in recent weeks that the pound will drop drastically the moment the government invoke Article 50 and begin official divorce proceedings. Forecasts have ranged from a five to ten per cent drop in the value of the pound, which would force GBP/USD to a fresh three decade low.
However, in my opinion I don't think the pound will lose that kind of ground. We have known for months the government plan to trigger Article 50 by the end of March, and we also know Theresa May plans to give up the UK's access to the single market and push ahead with a "hard" Brexit.
I believe both of these scenarios have already been priced into the market, and unless we get some breaking news I actually think Article 50 will be a bit of a non-event.
We also have to remember President Trump. His recent comments and tweets, along with some of his recent policies have cast a cloud of uncertainty over the U.S and could prevent the dollar making any serious gains, despite the prospect of additional interest rates rises from the Federal Reserve.
The next few months are certainly going to be interesting and I will of course keep you updated with any news and views that could impact the value of the GBP/USD cross.
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As a specialist in currency exchange I have a 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.
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