Pound dollar mid-week update and forecasts

Good afternoon, it has been another choppy start to the week for cable and the swings we saw in exchange rates last week have continued. Since the start 2013 sterling has been in free fall against and the current trend shows no signs of improvement.

Positive retail sales data released on Tuesday did see a brief spike in rates, figures showed that sales increased for January by 1.9% compared to January 2012 which is the largest year on year rise since Decemeber 2011. The news saw the GBP/USD cross jump to a high of $1.5792 but sterling could not hold its value over the course of the day and rates quickly started to fall. By the close of business yesterday the pound actually fell by 1% against the dollar to reach a low of $1.5634.

Over in the states talk of spending cuts and tax increases have started to surface again. The temporary package put together President Obama on the 1st of January is due to expire on the 1st March which has led to the President approaching congress to put together another short term package to avoid larger cuts next month. The proposal was quickly rejeceted and the longer it drags on the more likley we are to see the dollar come under pressure, lasts weeks poor GDP figures for Q4 were put down to the 'Fiscal Cliff' and if a solution there is chance rates could start to push higher.

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Tomorrow is quite a big day in terms of data releases in the UK which could give us an indication of things to come. The Bank of England are holding their monthly meeting and if they opt for another round of quantitative easing it is possible we could see rates fall even further. If they don’t we might see some support for the pound which could see rates start to creep back up again. The UK economy seems to be the centre of attention at the moment and in my opinion I think it is unlikely we will see rates push back towards the $1.60 mark any time soon. In fact one of the forecasts we received from our brokers recently indicated that rates could fall back towards $1.53 within the next 12 months

With so much volatility surrounding the currency markets at the moment the use of Stop Loss and Limit Orders has increased massivly, they can protect you against a falling market but also help target a rate that might not be currently available. Below is a link that will give you some more information regarding the different types of contract I can offer.  

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However, one thing I would recommend is not to get caught trying chase your losses; it can be a very dangerous game especially if you are looking to move large volumes of currency. What I have tried to explain to clients over the last few weeks is that if your purchase is in budget then look at fixing your rate of exchange, even if you don’t need the money straight away. 

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So if you are looking at buying or selling dollars, for personal or business use in the coming months don't leave it to chance, the way the currency markets have been moving for the last few weeks could end up costing you thousands. If you haven't done so already click here for a free, no obligation consultation.
  

 

Pound dollar exchange rates continue to fall

A lack of data in the UK last week meant that sterling was at the mercy of events elsewhere. So far this year we have seen the pound fall by nearly 4% against the dollar, so what has happened to cable over the last 7 days, and will the trend continue? In this week’s report we will take a closer look at the key factors which impacted the GBP/USD cross.

The start of last week saw the trend continue as rates fell by nearly 0.8%. But in a turn of events in the latter part of the week cable recovered and climbed 1.3% to reach a high of $1.5876. However, the gains were short lived as Friday saw sterling lose nearly a point due to poor UK manufacturing data and solid non-farm payroll data from the states, which came in only 3000 under what had been forecast.

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The main reason for the sudden mid-week gain was the surprise announcement that the U.S economy had shrunk in the final quarter of 2012. Initial estimates indicated that the world’s largest economy contracted by 0.1% when analysts had been expecting 1.1% growth. It will be a bitter blow if the figures are confirmed and will add to pressure on the U.S Federal Reserve (FED) to do more to help boost the U.S economy. More quantitative easing could now be on the cards and if the FED opts to go down that road again it could potentially mean the dollar weakening against a basket of currencies.

Quarter four in the states was dominated by talk of the Fiscal Cliff and although avoided by a last minute deal put together by President Obama the fear created by the prospect of huge spending cuts and tax increases seem to have had a knock on effect for businesses and consumer confidence.

Part of the fiscal package included an increase in tax payments for the highest earners in the states and the expiry of a payroll tax holiday for all U.S employees. Economists believe this could hinder the U.S economy for quarter one of 2013 and if figures released in April show a contraction it will mean the U.S has entered into recession for the first time since 2009.

  

If the U.S were to head back into recession we could see some major swings in the currency markets over the next couple of months, With the UK teetering on the edge of a triple dip recession along with the threat of losing its prized AAA credited rating the volatility we have seen over recent weeks shows no sign of letting up.

 The swings we have seen in trading over the last week once again show just how important it is to stay in touch To put last week’s movements into monetary terms a £200,000 trade into dollars would have seen you receive nearly $4000 less had you brought on Tuesday rather than Friday. As a currency broker I have a range of currency contracts to help you make the most of your currency transfer, so if you haven’t done so already click here for a free, no obligation consultation.

Pound/dollar exchange rates recover some lost ground

Good afternoon, despite a poor run which has seen GBP/USD exchange rates drop by almost 4% since the turn of the year, today has seen a slight upturn in Sterling's fortunes against the dollar. With a lack of data due out from the UK this week rates remained relatively flat over the course of Monday and this morning. The mid-market price was hovering around $1.57 before a sudden spike Tuesday afternoon saw cable reach $1.5772, a gain of nearly 0.5%.

So what caused this spike?

As I mentioned there is little out this week from the UK so in my opinion the rise was not from sterling strengthening. Around the time of the of the gains Consumer Confidence figures from the states were released and were much lower than forecast. The figures from the Conference board highlights the level of confidence that individuals have in U.S economy and a high reading can positive for the USD, while a low reading can be negative. Today's figures came in 5.4 points under what was expected and could be the reason why we saw the dollar lose some ground against the pound.

 In my roll as a currency broker, I have access to currency forecasts from a range of different sources. One of my brokers have revised their forecasts in the last 24 hours for GBP/USD exchange rates.They are forecasting that rates will push back towards $1.62 within the next 3 months, this is great for those looking to purchase dollars but not so good for clients looking to sell.



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This of course is only one predication and with a range of forecasts available it is impossible to predict which way the markets will move. With that in mind, if you haven't done so already, you need to find out what tools are available to help you make the most out of your currency transfer. I can offer a range of currency contracts that can give you the flexibility and the peace of mind to help you make an informed decision.

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Pound/dollar rates fall as recession looms

Last week was a very busy week for data releases and big movements were seen for the GBP/USD cross. This week’s report will look at what has affected the rates recently and what you need to consider over the coming weeks when wanting to make the most out of your funds.

The UK economy was the main focus last week and all eyes were on the Bank of England (BoE) minutes Wednesday morning and Q4 Gross Domestic Product (GDP) figures out on Friday morning. The BoE minutes showed interest rates staying at 0.5% and an 8-1 vote against more monetary stimulus being required to help boost economic growth. Better than expected unemployment figures also helped slow the movement in the rates as Sterling gave up three quarters of a cent to the USD.

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Insecurity seems to be the driving force regarding the GBP/USD cross at the moment, if investors are unsure due to increased volatility and uncertainty, safe haven currencies tend to benefit and strengthen, and this is exactly what the USD is doing at the moment.  We have seen a 3.4% drop in the GBP/USD rate in just 3 weeks and it does look as if the rates could continue this trend over the coming months. Fridays GDP figures came in as expected with a figure of -0.3 showing that the UK economy is now one half of the way towards a triple dip recession.

Further movements in the rates will continue and we could see problems stateside if the fiscal cliff debate continues past the March deadline. With UK credit rating agencies chuntering about removing the current triple-A rating for the UK Banks; if this does happen, we could see further movements and a reduction in the GBP/USD rate as it will cost more for consumers and investors to borrow funds and will hinder future debt reduction targets as economic growth will slow. 

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With the movements we have seen so far for 2013, a typical purchase of $250,000.00 would now cost you nearly £6000 more. If you are looking to make the most of your funds whether it is now or in two years time now is the time to take action. Click here for a free no obligation consultation discuss your options and different types of contract at your disposal.

Sterling dollar exchange rates fall again!

Good afternoon, today has seen the recent trend continue as the pound lost further ground against the dollar. Trading levels have now dropped back to lows not seen since August as the mid-market price fell back into the $1.57's. This afternoon has seen cable drop another 0.5% and is once again down to sterling weakness. In today's post I will take a look at what we could expect to see for the GBP/USD cross.

Since the turn of the year sterling has been in free fall against a number of currencies, against the dollar we have seen a 3.5% drop in exchange rates, to put that into monetary terms exchanging £200,000 now will see you receive nearly $12,000 less than at the start of the month and with so much negativity surrounding sterling at the moment it is quite possible we could see the rates continue to slide.

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Despite the positive news that UK unemployment levels fell yesterday there was little movement in the currency markets as Prime Minister David Cameron's long awaited speech cast further uncertainty over the UK. Mr Cameron went on to say that if the conservatives are re-elected he will give the people of Britain a choice over the countries future within the euro-zone. Elections are not due to take place for another year and a half which could affect future investment into the country.



Another reason for the sudden drop in exchange rates this afternoon could be down to the UK GDP figures that are due out tomorrow (25th Jan). The currency markets move on rumours as much as facts, so if market players are predicting another quarter of contraction is on the cards, we could well be seeing it being priced into the market already.

If the initial reading confirms that the UK economy did contract for Q4 2012 it will fuel speculation the UK is facing a triple-tip recession and would potentially lead to further loses against the dollar, safe haven flows could increase into the greenback bring rates towards the $1.54 mark we saw in June.




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If you are thinking of buying or selling dollars in the next couple of months there are a variety of currency contracts available to help you get the most from you transfer. Whether you want to target a rate that is not currently available or book your rate (for up to two years in advance) I can help you achieve the best possible commercial rates of exchange. Click here to compete the contact form for a free, no obligation consultation.

Sterling falls to lowest levels for five months

The last 24 hours have been fairly volatile for cable, since yesterdays post GBP/USD rates have fallen to there lowest levels for five months. Last night rates dipped to $1.5807 a level not seen since August 2012 before recovering back just below $1.59. In today's post we will take a look into events that caused this movement and what we can expect over the next few days.

Despite some negative news first thing this morning the pound slowly recovered over the course of the day. Early on saw the latest UK public net borrowing figures released. The Office for National Statistics (ONS) reported that Government borrowing had increased slightly for the month of December and will once again add to the increasing speculation that the UK's prised AAA credit rating could come under threat. If the UK was to have its rating downgrading it could mean sterling will seem less appetising for investors which means the value of the pound could drop against a number of different currencies.

One positive for the UK today was the 10 year bond auction, results were more or less as expected and lent some much needed support to the to the pound. After the auction cable rallied and reached a high of $1.5892 by mid afternoon.

However, the recent climb may be shorted lived, this evening Bank of England (BoE) Governor Sir Mervyn King is due to hold a press conference. In tonight's speech Sir Mervyn will talk about how the BoE view the current UK economy and the value of the pound. His comments can lead to some swings in rates as they may determine a short-term positive or negative trend.

Since the turn of the year cable has been on a downward trend, since the 11th January rates have dropped by nearly 2.2%. This is not all down to Sterling's troubles, the temporary package put together by President Obama to stop the U.S going over the fiscal cliff went a long way to increasing investor appetite for the greenback, but with the official GDP figures for the UK due for release on Friday many analysts believe we could see rates continue to fall.

If you need to buy or sell dollars in the coming months, it is vital you know what tools are available to help you make the most from your currency transfer. With a range of currency contracts available, not only can you secure your rate of exchange for up to two years in advance but also ensure you get the timing right on your transaction. If you haven't done so already click here to complete the contact form for a free, no obligation consultation. 

Cable weekly overview

Last week was a negative one for GBP/USD as the dollar started to retrace some of the losses it made against sterling over recent weeks. Cable has been a volatile cross over recent weeks due to both troubles in the UK and the ever mentioned fiscal cliff.

 

 As the graph above shows we opened around the 1.6150 mark and have steadily declined throughout the week.  With well documented troubles regarding the fiscal cliff in the US many clients are asking why the dollar is strengthening day on day against the pound. The answer is fairly simple, the US are making all the right noises at a time where the UK are making all the wrong noises and showing signs of entering into a triple dip recession.

The Christmas period was better than expected for the US economy with better than expected retail sales in November and December which was only revealed in Wednesdays FED Beige Book. It means the economy in the US has started to grow and show positive signs to grow further.

The Beige Book also revealed that the manufacturing sector was still under performing and the effects of the fiscal cliff were still having a knock on affect to the markets. This news caused the pound to start making small gains against the greenback. That was until jobless claims were shown to have reduced by over 30,000 killing off any rejuvenated hope from the UK.

So why is the pound so weak?

The UK is still under threat of losing its prestigious triple A credit rating by both Moody’s and S&P ratings agencies. A downgrade would reduce investors risk appetite and increase the likelihood of investors looking for a safe haven currency like the greenback. The main cause for sterling weakness however is the imminent threat of the UKentering into a triple dip recession.

A recession is caused by two consecutive quarters of negative growth. The fear for the UK markets is that recent data releases such as our recent GDP estimate of -0.3% indicate that the last quarter of 2012 was worse than expected and the first quarter of 2013 could follow suit. Later this week the official GDP figures are released and if they match the estimates it is highly likely we could see sterling lose even more ground against the dollar.

Either way you look at the market it is a difficult time to gauge any future movements, reinforcing the importance of staying in close contact and utilising the tools that are available. Click here to complete the contact form for a free, no obligation consultation.