Sterling dollar exchange rate weekly overview

Good afternoon,

In today's post I will give a brief overview of events that have impacted the GBP/USD cross over the last 5 days. Since the start of the year we have seen a massive decline in exchange rates across the board where sterling has been involved. This week I am glad to report there has been a slight upturn in the pounds fortunes as cable has gained nearly 2.2% since Tuesday.




 








 
At the start of the week sterling slumped to a fresh low of $1.4848 before recovering today (Friday) to reach a high of $1.5172. Having access to range of Forecasts I was interested to see that one broker is predicting we could see exchange rates move back towards $1.56 in the next three months and $1.53 in the next twelve. This to me seems hard to justify especially considering all that has happened to the UK over the last few months which has Britain facing yet another recession.  Earlier this week I posted that there is talk that we could see cable fall back towards $1.40 by the end of the year so with such a wide spread across the market it is almost impossible to try and gauge where rates will be a few months from now.

So what has caused this weeks gains?

I have been a little surprised to see the gains sterling has made against the dollar over the last few days. At the start of the week the UK suffered from poor Manufacturing figures which showed that output had fallen by 1.5% in January which left exchange rates sitting around the mid $1.48's. We also saw some excellent figures come out of the U.S in the form of Retail sales and Factory Output but despite the positive news from the U.S exchange rates started to climb.

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The main reason for the gains seems to be down to some positive comments from Sir Mervyn King. The Bank of England Governor said that a UK economic recovery is in sight and that the pound has fallen enough in recent months. It has been sometime since Sir Mervyn has spoken positively about the situation in Britain and comes as a bit of shock considering that it was only last month that he voted for more quantitative easing. It seems that these latest comments have lent some much needed support to sterling but the positive moves for exchange rates could be short lived.

One thing the last week has proven is that getting the timing right on your currency trade is so important. To put this weeks move into monetary terms a £200,000 trade at the start of the week would have seen you receive nearly $6500 less than on the same trade put through today.

If you need to by or sell dollars in the next few months use the link below for a free, no obligation consultation to discuss how using a currency broker could save you or make you thousands.

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Sterling dollar exchange rates climb by over a percent

Good afternoon everyone,

After what seems like weeks of negativity for the sterling/dollar cross there were finally some positive moves this afternoon. Over the course of trading today exchange rates have increased by over 1% as the pound responded to some flat data from the U.S, at the time of writing this post the mid-market rate has broken through the $1.50 barrier to reach a high of $1.5092.

 
After yesterdays positive U.S retail sales figures (which saw spending increase by 1.1% for the month of February) U.S initial jobless claims fell by 18,000 to help ease the burden on the economy. I don't think this the reduced number would have come as much of a surprise following the excellent jobs data we saw come out of the states last week.  

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Today also saw the release of the U.S Producer Price Index (PPI) for February, which came in exactly as forecast at 1.7%. The PPI measures the changes in prices of commodities from producers and a high reading can have a positive impact on the greenback.

Markets will have been buoyed by the retail figures but with today's data not causing any alarms it seem as though the wind has been taken out the dollars sails for the time being. I don't think today's gains for sterling mean we have turned the corner, I still believe the pound will come under increasing pressure over the next few weeks as we build up to the release of Aprils Gross Domestic Product (GDP) Figures.

If Aprils initial reading shows the UK economy has contracted in the first quarter it will leave the UK in a triple-dip recession. If that happens (which looks increasingly likely) we can expect sterling to suffer against a basket of currencies and I wouldn't be surprised to see exchange rates tumble. As I have mentioned in previous posts it is widely tipped that the GBP/USD cross could fall as low as $1.40 by the end of the year.

If you have to buy or sell dollars in the next few weeks knowing what type of currency contracts are available could potentially save you thousands of pounds. Click here for more information on the type of contracts. I can help business clients and private clients move their money overseas, whether it is for regular trades or a one off transaction. For a free, no obligation consultation use the link below to complete the contact form.

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Pound dollar rates fall on the back of poor UK manufacturing

Good afternoon,

Sterling had another poor day at the office and fell against the dollar after official figures showed that UK manufacturing output fell by 1.5% for the month of January. Cable dropped from $1.4920 to a low of $1.4832 on the back of the data release and the recent numbers will add to fears the UK is heading towards another recession.

The figures from the Office of National Statistics (ONS) came in much weaker than forecast leaving many economists to believe that this was the final straw for the UK economy and that we have no chance of avoiding the triple-dip. 

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Although exchange rates recovered slightly over the course of the day the recent decline now means we have seen a 9% drop against the dollar since January. To put that movement into perspective, a £200,000 trade into dollars will now see you receive nearly $30,000 less than at the start of the year.

The one question on clients lips at the moment is do I think rates will move back up? At the moment the outlook for sterling/dollar does not look great. We may see a slight recovery if the UK does somehow avoid recession but I fear the damage may have already be done by the time the figures are released. 

If the UK does fall into its third recession since 2008 I think it is highly likely we will witness exchange rates fall even further. It is widely tipped that we could well see the GBP/USD cross reach a low of $1.40 by the end of the year. 

This is great news for anyone selling but if you are looking to buy dollars in the coming months further losses could prove to be very costly. As a currency broker I can offer a range of contracts to help you make the most of currency transfer and protect you from any more adverse market movements.Complete the link below for a free, no-obligation consultation.

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Sterling dollar forecasts and overview

Good morning,

After Wednesdays post GBP/USD exchange rates dropped to their lowest level this week, cable fell back to $1.4971 which means we have now seen a 1.5% swing in exchange rates over the last 7 days. Today's post will take a closer look at events in the last 48 hours that have impacted exchange rates and what my thoughts are for the next couple of weeks.

 








As I have mentioned a few times over the last few days, yesterday (Thursday) was an important day in terms announcements with the Bank of England (BoE) and the European Central Bank (ECB) set to give the results of their monthly meetings.

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First up was the BoE and as expected policymakers refrained from cutting interest rates and adding to the existing Quantitative Easing (QE) plan, which has so far seen the bank pump £375 billion into the UK economy in an attempt to stimulate growth. After the results were published things started to pick up for sterling as rates jumped by half a point in a matter of seconds to recover some of the lost ground we saw on Wednesday, reaching the day high of $1.5081.

However, the gains were extremely short lived as less than an hour later Mario Draghi (the head of the ECB) spoke at his monthly press conference. During his speech Mr Draghi said that the Central bank will keep interest rates on hold and that he expects the euro-zone economy to stabilise over the course of the year. He also went on to say that growth could well return in 2014 although downside risks still remained. 

In recent weeks Mr Draghi has done a very good job of talking up the Euro and giving the Euro-zone a positive spin. Yesterday was no different and over the course of the day sterling dollar exchange rates suffered and started to tail off. 


In Wednesday post I said that no QE from the BoE could lead to some short term gains for exchange rates but I wasn't expecting them to only last 45 minutes! The moves we have seen this week, despite some positive data for the UK goes to show just how volatile the currency markets are at the moment. I also expect the big swings we have seen in rates for cable to continue for the next couple of weeks and it will be interesting to see how the markets react when the minutes from the BoE meeting are released towards the end of the month.

So where do I see exchange rates going?

With the U.S dollar seen as a safe haven currency, I think it is unlikely we will see any major gains for sterling unless we see a sudden change in risk appetite. At the moment the euro seems to be a preferred option for investors, especially since the UK had its credit rating downgraded last week. The problem for sterling at the moment is that if investors were to leave the greenback, safe haven flows out of the dollar are unlikely to have any real impact on exchange rates with pressure mounting on the UK economy.

If we see a run of negative data coming from the UK in coming weeks there is every chance we could see exchange rates fall back towards $1.45.

What should you do?

If you are a business or private client and have a requirement to move currency in the next few months, it is important you are aware of the different types of contract that are available to help make the most of your currency transfer. If you would like more information on the contract or would like to discuss exchange rates in more detail click on the link below for a free no obligation consultation.

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Sterling dollar exchange rates continue to slide

Good afternoon,

The gains we witnessed for sterling/dollar exchange rates at the start of the week seem to have been short lived as the pound resumed its recent trend and fell back against the dollar. At the time of writing this post rates were sitting at $1.5027 (the lowest we had seen throughout trading today). In today's blog I will cover the events that have effected cables performance over the past 48 hours.

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Yesterday (Tuesday) saw some positive news for the UK economy and improved sterling's performance slightly, retail sales figures for February came in higher than expected and showed that sales had grown at their fastest rate in over three years. Any major gains on the back of the data release were muted as the UK construction sector suffered its worst month since 2009 and markets wait in anticipation for the results of the Bank of England (BoE) meeting on Thursday afternoon.

Decision day

As I have mentioned a number of times over recent weeks the pound has been coming under increasing pressure and I expect tomorrow will be no different. Tomorrows BoE meeting will see policy makers announce their latest interest rate and Quantitative Easing (QE) decision. Last month three of the nine members voted for further stimulus (which included the BoE Governor Mervyn King) and if two more members decide that more QE is required to stimulate growth it is likely we could see sterling suffer, as the last time QE was announced the pound fell sharply against a number of currencies in the matter of minutes.



What if no QE is announced, will we see rates move back up?

Although it might lend some short term support for sterling and exchange rates, the risk of a triple-dip recession is still looming, I think the uncertainty surrounding the UK will continue until the official Gross Domestic Product figures (GDP) are released in April. Even if no QE is announced I don't think will will see exchange rates shot back up towards $1.60 as the Bank of England seem keen to keep sterling's value down to try and boost UK exports. If we avoid recession in April that will be the time we start to see rates increase as some of the pressure will have eased but even then I believe the gains will be limited.

If you have a requirement to buy or sell dollars in the coming months, being aware of the savings I can make over banks and the different types of currency contract could prove vital. With some much volatility in the currency markets getting the timing right on your transaction could save you thousands. Complete the contact form for a free, no obligation consultation to discuss your options in more detail.

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Dollar exchange rates climb on the back of spending cuts

Good afternoon to you all,

Today has seen a slight recovery for sterling as exchange rates pushed back towards $1.51 as spending cuts in the U.S weakened the greenback. It was interesting to see which way rates would move this morning as the markets had their first opportunity to react to the weekends events  With no data coming from UK today the pound was at the mercy of how investors viewed the cuts President Obama was forced to sign off.

Following Fridays decline which saw cable drop back into the $1.49's all eyes were on the White House to see if congressional leaders could come up with a plan that would avoid huge spending cuts being implemented. However, with talks breaking down with no agreement reached the deadline was fast approaching the President had no option but to sign into effect the spending cuts which will see $85 billion wiped from the U.S budget for 2013.

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In the days leading up to the event Mr Obama had warned that if a deal could not be reached then growth in the economy will suffer and could potentially cost 750,000 people their jobs.

So where does this leave exchange rates?

As I mentioned last week it was impossible to gauge which way rates would have moved, as a safe haven currency weak U.S data often causes the dollar to strengthen and although we have seen some positive movements over the course of today the state of the UK economy has dampened any major spike.

The gains seen today might be the best we see this week as on Thursday will see the results of the latest Bank of England meeting. Some analysts are predicting we could see policymakers increase the current quantitative easing programme which if done may see the pound devalue and exchange rates fall.

This may only a short term prediction as some of our brokers still believe that rates will pick up over the
coming months. One forecast I received this morning indicated that we could see the GBP/USD cross move back towards $1.56 in the next three months. I think this is still someway off at the moment and a lot will depend on how Thursdays meeting pans out.

If you need to buy or sell dollars in the coming months there a number of currency contracts available to you that can help you make the most of transfer. Complete the contact form for a free, no obligation consultation to discuss your options in more detail.

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Pound dollar exchange rate weekly overview

Cable started the week in volatile fashion with the currency pair suffering from the announcment by Moody's that the UK's AAA credit rating had been downgraded. The agency reduced the UK rating to AA1 following growing speculation over recent weeks and adding to the concerns over the future health of the British economy which may prompt other agencies to follow suit.

GBP/USD rates opened the week over 1% down from the previous Friday and continued to slide throughout the week, falling into the $1.49's for the first time since June 2010. As the slide continues and with no signs of recovery sterling currently holds the title of the weakest currency of 2013.

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Over in the States US political leaders are still locked in last-ditch talks at the White House to try and thrash out a deal over the prospect of huge budget cuts. Cuts worth $85bn, originally passed in January are due to become law by the end of Friday. Some analysts in the US are suggesting that countries GDP would suffer if the cuts are not delayed, if this were to happen we could see exchange rates start to creep back up again.
  

The issue for clients looking to buy dollars is that even if the cuts start to weaken the US economy there is every change that the dollar could gain strength. It is commonly said that the economic health of the states is a barometer for the rest of the world. Therefore a weak US economy could see investors pull their funds from riskier investments such as the pound and euro and put them back into the the safe-haven US Dollar.

Next week should be a very interesting one for the pound/dollar cross as we will be able to see what impact the first round of cuts will gave on the markets. Sterling will also remain in the spot light as the Bank of England meet for their monthly meeting. Recent data releases have fuelled reports that more Quantitative easing is on the cards and if implemented there is every chance the pound could lose further ground.

If you are a business or private client and have a need to buy or sell dollars over the coming months waiting to see where the markets will be is a very risky tactic. If you complete the contact form I can talk you through the different type of currency contract that can help you make the most of your currency transfer.

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