The pound continues to rise against the dollar.

Today has seen the pound rise across the board, with the GBP/USD cross rising over a cent during the course of the trading session.

 

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With little to report in terms of eco-stats or political announcements, it would seem the pound is still benefitting from Article 50 being triggered and Theresa May's positive speech yesterday.

As you can see from the graph below the GBP/USD cross has risen from $1.2405 to $1.2520, with the currency pair clawing back some of the ground it has lost since Tuesday.

If we look at today's move in monetary terms, converting £250,000 into dollars this afternoon will achieve you nearly $3000.00 more than it did first thing this morning.

 

GBP/USD graph.

Following the invocation of Article 50 yesterday markets finally have some clarity surrounding Brexit. We have now entered into the two year negotiation period, and in the words of Theresa May "there is no going back".

We also know the European Union are not going to start negotiating until the end of April, so we probably won't hear of any major developments for a couple of months. This could give the pound an opportunity to continue rising against the major currencies, especially if the UK economy continues to over perform. However, it could just be the calm before the storm.

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Article 50 impact on the pound

This afternoon has seen UK Prime Minister Theresa May trigger Article 50 and begin the official divorce proceedings with the European Union.

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Since Monday afternoon the pound has been slipping against the U.S. dollar, with the GBP/USD cross falling from an eight week high of $1.2614 to $1.2375 in the early hours of this morning.

Some thought the move was a sign of things to come and that the value of the pound would plummet the moment Article 50 was invoked.

However, I have been saying for weeks that I didn’t think the pound would suffer on the back of Article 50 and that today could even be a bit of a non-event……and that is exactly what has happened.

As Theresa May delivered her speech at 1230 BST, the pound actually start to rise against the dollar, with the currency pair rising almost a cent to hit $1.2475.

GBP/USD graph

 

Why has the pound held its ground?

The main reason is because today has not come as a shock. We have known for months that the UK government planned to trigger Article 50 by the end of March, and it seems it was already priced into the value of the pound.

Yesterday’s decline for the GBP/USD cross was not only down to markets positioning themselves ahead of today’s events and Sterling weakness. After a dreadful few days for the dollar, it actually managed to claw back some lost ground yesterday afternoon, after the Federal Reserve once again promised additional interest rate hikes over the course of this year.

What next?

Although the pound has managed to hold its head above water today, it is almost certainly going to remain under pressure for the foreseeable future. We now have the prospect of two years of negotiations to deal with, and during that time we are going to see some big swings for the GBP/USD cross.

The dollar could also come under pressure this year as markets try to adjust to President Trump and his policies. We have already seen the dollar suffer this week after Trump failed to push through his reformed healthcare bill and with concerns mounting over the rest of his agenda, we could easily see the dollar give up the gains it has made since Trump won the election.

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GBP/USD slips after Fed comments

Over the course of today's trading session we have seen the U.S. dollar claw back some ground against sterling, with the GBP/USD cross falling around a cent, leaving the currency pair trading just above $1.25.

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After rising to an eight week high yesterday afternoon of $1.2614, the GBP/USD cross lost ground today after the Federal Reserve promised additional interest rate hikes during 2017.

GBP/USD graph

The comments from the Federal Reserve have helped the dollar recover slightly, and also given investors some much needed confidence following President Trump's failure to push through his new healthcare bill.

Article 50

The Brexit process will finally kick off tomorrow with UK Prime Minister Theresa May set to trigger Article 50 in order to begin the official divorce proceedings with the European Union.

Although the Federal Reserve's comments will have been the main reason behind the GBP/USD cross falling today, I do believe some of the loses will be down to investors re-positioning themselves ahead of tomorrow's announcement.

As I mentioned yesterday, some forecasts are suggesting the pound will lose even more ground once Theresa May invokes Article 50, but even though we are now less than a day away, we still don't know how the markets are going to react.

If markets have already priced in Article 50 we may not see much movement in the value of the pound. On the hand it could create a huge amount of volatility and it could be like the day after the referendum all over again.

 

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GBP/USD hits eight week high.

The GBP/USD cross rose to an eight week high of $1.2614 today, after the U.S. dollar weakened across the board.

 

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With Theresa May set to trigger Article 50 on Wednesday we could be set for a volatile few days for the currency pair, but for the time being at least the pound has continued to rise against the dollar and if we take into account today's move the GBP/USD cross has now climbed over 4% in the last two weeks.

GBP/USD graph

Why is the dollar weakening?

The U.S. dollar lost ground today after markets lost faith with President Trump after he failed to deliver his reformed healthcare bill.

With Trump failing with one his main campaign pledges, investors and market players are now concerned the President will also fall short on his promise to increase fiscal spending and cut taxes in order boost growth in the U.S.

The reformed healthcare bill was seen as one of the easiest things for Trump to implement, which doesn't bode well for the rest of his agenda.

What impact could Article 50 have on the pound?

Unfortunately it is a difficult question to answer. Most forecasts are suggesting the pound will lose ground the moment Theresa May invokes Article 50 to begin the official divorce proceedings.

How much ground the pound will lose is impossible to say, as it will depend if markets have already priced Article 50 into the pounds value.

We could easily see GBP/USD fall a couple of per cent if it creates more uncertainty. On the other hand if it is seen as providing clarity if could prevent the pound from falling and Wednesday could be a bit of a non-event.

 

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Pound hits one month high against the dollar

Today has seen the pound rise to its highest levels against the U.S. dollar since the 24th February, with the currency pair hitting $1.2527 this afternoon.

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The pound received a huge boost this morning after the latest retails sales figures smashed the predicted level of 0.4%, coming in at 1.4%, helping sterling to rise across the board.

GBP/USD graph

With concerns mounting over Article 50 being triggered next week and the impact it will have on the value of the pound, today's retail figures will give investors some extra confidence and once again show the UK economy's resilient side.

Next week will lead us into the unknown and it is almost impossible to predict what will happen in the FX markets.

Some forecasts are suggesting the pound will lose ground the moment Article 50 is triggered and that we could see GBP/USD drop below $1.20.

Others are saying that once Article 50 in invoked it will provide some clarity for the markets and could give the pound a boost.

My opinion is somewhere in the middle. I think Article 50 has already been priced into the value of the pound so I doubt we will see the pound plummet. I do think it will provide some clarity for investors but it is unlikely the pound will rise on the back of it.

We have known for months that Article 50 will be triggered at the end of March and we also know Theresa May will push ahead with a "hard" Brexit. Unless we are thrown a curve ball between now and Wednesday, Article 50 is not going to come as a surprise so there is a chance it will actually have very little impact on the pound or FX market.

 

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GBP/USD exchange rate falls

After rising to $1.25 in the early hours of this morning the GBP/USD cross fell almost three quarters of cent to leave the currency pair trading around $1.2430.

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As I mentioned in my post yesterday, the pound surged following the latest round of inflation figures. With inflation pushing above the Bank of England's target of 2%, expectations of a rate hike in the near future had been increasing.

Last week the Bank of England meeting minutes showed one member of the Monetary Policy Committee had voted for an immediate rate hike, while others were sitting on the fence and ready to act if needed.

However, the pound has been unable to hold onto the gains as many now think the Bank of England were simply taking a hawkish stance in the build up to Article 50 being triggered and to address the decline in consumer sentiment and spending.

GBP/USD graph.

 

 

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Why has the pound risen against the dollar this morning?

This morning has seen the pound surge across the board after the latest round of inflation figures
were released at 0930 (GMT).

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Markets had been expecting the UK inflation figure to rise from 1.8% to 2.1%, but with the actual reading coming in at 2.3% it has given the pound a much needed boost following yesterday's drop.

As you can see from the graph below the GBP/USD cross has risen over a cent so far today, with the currency pair climbing from $1.2342 to its current level of $1.2459.

GBP/USD graph

Figures released by the Office for National Statistics (ONS) confirmed inflation had risen to 2.3% last month, up from 1.8% in January, with the ONS stating that rising food prices and fuel were the major drivers in pushing the inflation reading higher.

The inflation rate is at the highest we have seen since September 2013 and takes us past the Bank of England's 2% target level. Inflation levels in the UK have been climbing after Junes referendum result caused the pounds value to fall, which in turn made imported goods more expensive to buy.

This morning's news will back up MPC member Kristen Forbes recent calls for an interest rate hike in the near future, and if  Bank of England governor Mark Carney drops any hints over monetary policy when he speaks in half an hour (1030 GMT),  we could see the pound rise even further over the course of today.

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Sterling unable to hold onto gains

After climbing back above $1.24 for the first time since the 28th February this morning, the GBP/USD cross lost ground during this afternoon with the currency pair falling back below $1.2350.

With no major economic data being released from the UK or the United States today, it would seem markets have reacted to the news that Prime Minster Theresa May plans to trigger Article 50 on the 29th March.

A spokesperson from Downing Street confirmed earlier today that May would write a letter to the European Council to officially notify the EU the UK is leaving, and hoped negotiations on the terms of future relations and the terms of the UK's exit could begin as quickly as possible.

GBP/USD graph

It is still unclear what impact Article 50 will have on the pound once it is triggered. Although it is probably safe to say it will spark some heightened volatility for all sterling crosses.

Will we see the pound rise or fall on the back of Article 50?

It depends if it has been priced into the value of the pound and how markets view it. We have known for months that Theresa May planned to trigger Article 50 by the end of March and we have also known that she plans to give up access to the single market, so it should not come as a huge shock to everyone.

If the invoking of Article 50 has been priced into the pounds value it could be a bit of a non-event. There is also an argument to say that once triggered, it will remove some of the uncertainly that has been dragging down the pound and provide markets with some much need clarity.

 

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GBP/USD hits $1.24

Good afternoon,

The GBP/USD cross jumped to $1.24 this morning, after the dollar continued to lose ground following the Federal Reserve announcement on Wednesday evening.

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After falling to a fresh eight week low on Tuesday, the pound looks set to end the week around two per cent higher which will come as welcome news for the those of you looking to purchase U.S. dollars.

GBP/USD graph

Why has the dollar the weakened?

Despite the Federal Reserve raising interest rates on Wednesday, the dollar has lost ground across the board after investors were left disappointed.

When the Federal Reserve increased interest rates in December they stated they will look to raise rates three times in 2017. Since then the U.S. economy has been performing far better than many had expected and markets started to bet on the possibility of even more hikes over the course of the year, which is one of the reasons the dollar had been climbing in recent weeks.

However, those same investors have been left licking their wounds after the Fed said they remained on course for increasing rates three times this year.

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The pound gains against the dollar, but for how long?

Today has seen the pound move off of the eight week low we witnessed yesterday, with
the GBP/USD cross rising to $1.2250 in the early hours of this morning.

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The pound received a boost after Britain's Scottish minister David Mundell stated it would be impossible to have a decisive and legal independence referendum in Scotland in the timeframe laid out by Nationalist First Minister Nicola Sturgeon.

As I mentioned in one of my previous posts, Sturgeon wanted a second referendum to be held in Autumn of 2018 or Spring 2019. However, Mundell told Scotland's Herald newspaper that "It would be impossible for people in the timescale suggested by Nicola Sturgeon to make a reasoned view, and therefore, have a legal, fair and decisive referendum.

GBP/USD graph

Can the pound hold onto the gains?

The next couple of hours could bring some heightened volatility for the GBP/USD cross. At 1800 (GMT) the Federal Reserve will announce their latest interest rate decision, which will be followed at 1830 by a statement from Fed Chair Janet Yellen.

It is widely expected the Federal Reserve will announce another rate hike this evening. In my opinion the rate rise has probably been priced into the price of the dollar already, and if we are to see any reaction in the currency markets it will come during Yellens speech.

Investors will be listening closely for clues about the pace of future hikes, and if Ms Yellen hints at raising interest rates quickly then we could see the dollar benefit from increased investment flows in to the U.S.

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Pound drops against the dollar again. GBP/USD at fresh eight week low.

This morning has seen the pound give up the ground it made against the dollar during yesterday's session, with the GBP/USD cross falling to a fresh eight week low of $1.2111.

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After climbing to a high of $1.2250 yesterday the pound/dollar exchange rate has dipped as investors turn their attention back to the U.S. dollar, ahead of tomorrow's Dutch elections and the Federal Reserve interest rate decision.

With the dollar strengthening the EUR/USD cross has also fallen, with the currency pair dropping almost half a cent to currently sit at $1.0629.

GBP/USD twenty-four hour graph.

 

Will the dollar strengthen further if the Federal Reserve raise interest rates again?

We could potentially see further gains for the dollar tomorrow evening if Fed Chair Janet Yellen announces another interest rate hike. In theory a rate hike will usually increase the value of the country's currency due to the higher return on investors' funds.

However, the markets have been banking on the Federal Reserve tightening monetary policy for a couple of weeks now, so it is likely the rate increase has already been priced into the value of the dollar.

That's not to say we won't see any movement for the GBP/USD cross tomorrow. If Chair Yellen is positive over at the pace of future hikes, the dollar could benefit from increased investment flows into the U.S which would result in the pound losing more ground against its American counterpart.

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The pound rises against the dollar

Today has seen the pound bounce off of the lows we saw last week, with the GBP/USD cross rising to an intraday high of $1.2249.

The move has seen the pound claw back around a cent since last night after markets had time to digest Nicola Sturgeon's demands for a second Scottish independence vote.

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Sterling initially lost ground against the dollar and euro after Sturgeon stated she would request authorisation from the UK government to hold a new referendum.

However, the pound was able to quickly regain the lost ground and move into positive territory after Sturgeon said the referendum will not take place until the autumn of 2018 or the spring of 2019.

GBP/USD daily graph.

Will the pound rise against the dollar this week?

This week could be one of the most volatile weeks we have seen since the Brexit result in June. Theresa May could trigger Article 50 in the coming days and that is likely to see the pound come under an increased amount of pressure.

On Wednesday the U.S. Federal Reserve will conclude their latest monetary policy meeting and markets are banking on Fed Chair Janet Yellen raising interest rates again. Investors will also be looking for clues about the pace of future increases and if the result is positive we could see the dollar strengthen across the board.

Another event which could impact the GBP/USD cross is the Dutch elections. If right-wing Geert Wilders wins the vote on Wednesday it could prompt investors to pull out of the euro and head to the safety of the U.S. dollar, which in turn could force pound/dollar even lower.

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Pound cannot not hold onto gains

We have seen a half cent swing for the GBP/USD cross during today's London trading session, after markets reacted to European Central Bank President Mario Draghi's press conference this afternoon.

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GBP/USD had been hovering around the $1.2150 mark all morning, but during Draghi's speech the dollar started to weaken as investors pulled out of the dollar and headed for the euro.

The move allowed the pound to claw back some of the ground it has lost against the dollar over the past couple of sessions, with the currency pair coming in within touching distance of $1.22. However the gains can only be described as short-lived, as within the space of a four hours the GBP/USD cross was back trading around $1.2140.

 

GBP/USD daily graph.

What did Draghi say?

Over the past few weeks investors have been heading into the dollar, largely down to the potential interest rate hike from the Federal Reserve next week, but also because of the uncertainty currently surrounding Brexit and the French Elections.

Despite all the uncertainty across Europe, Draghi's comments this afternoon have given the euro a much need boost. Mr Draghi stated it was less necessary for the European Central Bank to support the market with ultra-loose monetary policy. He also said the central bank had removed the reference of using all available measures to increase growth and inflation "because the sense of urgency is not there".

What next for the GBP/USD cross?

In the short-term all attention will now switch to tomorrow's unpredictable Non-Farm Payroll jobs report from the U.S. After yesterday's bumper employment change reading, investors will be hoping Friday's job figure is just as positive, which if it is, will all but guarantee another rate hike from the Federal Reserve next week and we could see the dollar strengthen further.

 

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GBP/USD exchange rate hits a fresh seven week low

The pound has lost more ground against the U.S dollar over the course of today, with the currency pair falling to another fresh seven week low of $1.2141. 

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As you can see from the graph below, Chancellor Philip Hammond's 2017 budget did provide the pound with a small amount of support early this afternoon, however, the gains were quickly wiped out after the U.S. posted a huge employment change figure, which helped strengthen the dollar.

GBP/USD graph

Despite Philip Hammond increasing growth forecasts for the current year and reducing the predicted rates of public debt from his November forecasts, it was not enough to help pound as Brexit and the potential interest rate hike from the Federal Reserve continue to weigh heavily on the GBP/USD cross.

Rate hike on the cards

This afternoon's U.S. employment change report has also helped cement investors' hopes the Federal Reserve will increase interest rates at their meeting next week. If Friday's non-farm payroll jobs figure backs up today's employment reading it should all but guarantee the U.S. central bank will take some action next Wednesday.

If that is the case it leave the door open for the dollar to make further gains against the pound and it is just possible it could force GBP/USD towards $1.20.

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GBP/USD exchange rate drops under $1.22

Today has seen the pound lose more ground against the U.S. dollar as investor continue to bank on the Federal Reserve increasing their benchmark interest rate next week.

As a result of the dollar strengthening the GBP/USD cross dipped to a low of $1.2171 this afternoon, the lowest we have seen the currency pair since the 17th January.

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With today's drop, it means pound/dollar has fallen over three per cent in the past two weeks. Which if we look at in monetary terms, means a transfer of £300,000 into USD today, would achieve around $12,000 less than it did on the 24th February.

GBP/USD graph

When will the pound recover?

It is impossible to say at the moment as we are still in uncharted waters. Even without the prospect of another rate hike from the Federal Reserve, the GBP/USD cross would still be suffering.

Brexit continues to weigh heavily on the value of the pound and until the markets receive some sort of clarity it will be difficult to see the pound clawing back the ground it has lost.

We are still waiting for Article 50 to be triggered, but even once Theresa May gives the go-ahead to leave the EU, we are going to enter into a two year negotiation period and that is also going to cause a huge amount of uncertainty for investors.

 

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GBP/USD exchange rate falls again

The GBP/USD cross has fallen even further today, with the currency pair dropping to $1.2230 this afternoon. After rising to $1.23 during the early hours of this morning's trading session, the pound/dollar exchange has lost over half a per cent throughout today's London session as you can see from the graph below.

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GBP/USD daily graph

Why has the GBP/USD lost ground?

Today's move has been largely down to the U.S. dollar strengthening. Investors seem to be banking on the Federal Reserve increasing interest rates next week, while the dollar has also gained momentum due to the developments in the French elections.

During times of uncertainty the U.S. dollar is often seen as a safe-haven for investors and that is exactly what we have seen today. Former French Prime Minister Alain Juppe, today ruled out running in the upcoming elections, which has been seen as boosting the stock of anti-EU candidate Marine Le Pen.

A poll released last week showed that if Alain Juppe replaced Francois Fillon, he would win the first round of elections with Emmanuel Macron coming in second, ending Le Pen's chances of making it through to the next round.

However, today's developments have ended that theory and following Brexit and Donald Trump, investors are acting on the side of caution and have headed to the safety of the dollar.

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Pound/dollar exchange rate falls to six week low

Today has seen the pound fall to a fresh six week low against the U.S. dollar, with the currency pair hitting a low of $1.2260 this afternoon.

The decline means the GBP/USD cross has dropped almost 2.5 per cent in the last week, as the pound continues to be weighed down by talk of Brexit, while the dollar is strengthening as investors focus on the potential interest rate hike in the U.S.

 

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Although the drop is not ideal for those of you looking at purchasing U.S. dollars, it will come as welcome news for those who are looking to sell and move your funds back into sterling.

If we look at the move in monetary terms, converting $300,000 back into pounds will today achieve you around £6000.00 more than it did on the 24th February.

GBP/USD one week graph

Why is the pound falling?

As I mentioned above, talk of Brexit is still dragging the pound down. With so much uncertainty surrounding Article 50, the two year negotiation period and the future of the UK economy, investors are wary about moving funds into the country.

Data is also starting to suggest the UK economy is slowing. Since the referendum result Britain's economy has been showing its resilient side. However, following a raft of weaker eco-stats over the past couple of weeks, there are signs consumers and businesses are becoming increasing concerned.

When you add into the mix a potential rate hike for the Federal Reserve this month (which is likely to increase the dollar's value further), we easily see the GBP/USD cross test the $1.20 barrier in the coming weeks.

 

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GBP/USD exchange rate dips as the dollar surges.

Sterling has fallen almost a cent and a half against the U.S. dollar since yesterday afternoon, with the currency pair falling from $1.2475 to $1.2330.

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The move means the GBP/USD cross has fallen to its lowest level since the 20th January this morning, after the dollar gained ground across the board.

GBP/USD graph

Why has the dollar strengthened?

There are two reasons behind the dollar's rise. Firstly, President Trump surprised markets yesterday evening when he gave his first major speech in front of Congress.

Trump stated that he was open to an immigration reform, which would seem him move away from his harsh stance on illegal immigration, something that has dominated the news since he got into office.

The dollar then received another boost this morning after two of the Federal Reserve's policymakers hinted another rate hike is on the horizon.

President of the San Francisco Fed, John William said that a rate rise was on the table for consideration at the central banks meeting in March because of accelerating inflation and full employment.

William Dudley, New York Fed President was also in a hawkish mood, saying the case for tightening monetary policy "has become a lot more compelling".

Will GBP/USD recover?

It is almost impossible to say at the moment. If the Fed do increase interest rates in a couple of week's time it is likely the dollar will gain even more ground against its counterparts.

We are also getting closer to the UK government triggering Article 50. With investors still uncertain about the impact leaving the EU will have on Britain's economy, plus Nicola Sturgeon planning a second Scottish independent vote, the pound looks set to remain under pressure in the coming weeks.

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

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