GBP/USD exchange rates recover slightly

Good afternoon,

After a frantic start to the year today has seen the FX markets return to some kind of normality. After falling to a fresh low against the dollar yesterday afternoon the pound managed to claw back some ground during Wednesday's session after tensions eased in China.

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Despite a lack of eco-stats the pound was able to climb back over the $1.44 barrier and reached a high of $1.4474, putting an temporary stop to proceedings which have seen the pound lose around 3% since the start of 2016.

GBP/USD graph

What has helped the pound today?

Last week saw investors pour into the U.S. dollar after growing concerns in China, helping the greenback gain across the board. However better than forecast Chinese data today helped to ease fears over the globes second biggest economy, giving the pound a chance to stage a mini revival.

 

So will we see rates push back towards $1.50?

Not at the moment, as I mentioned yesterday there is more scope for the GBP/USD to fall further rather than climb back to the levels we witnessed before Christmas.

Now that the Federal Reserve have raised interest rates and the potential for further hikes this year, the dollar has the potential to gain in value even more in the coming months. Coupled with the fact that the Bank of England are unlikely to increase their benchmark rate this year, the outlook for the pound does not look great.

All eyes in the UK are now focusing on the Bank of England rate announcement and minutes tomorrow afternoon. The result should give us a clear indication to the central banks views on the current state of the UK economy and I for one are not expecting them to paint a pretty picture.

I wouldn't be surprised to see the GBP/USD cross test the lows we saw yesterday and if the MPC vote 9-0 in favour of keeping rates on hold we could see the currency pair fall back towards the $1.42 mark.

 

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GBP/USD exchange rate falls to fresh low

Good afternoon,

Well that didn't last very long did it!...In yesterday's post I mentioned that the pound had managed a slight recovery against the dollar but twenty four hours later it seems normal business has resumed.

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GBP/USD fell again during today's session with the currency pair falling to a near seven year low.

The pound dropped from $1.4537 to $1.4360, a level not seen since April 2009. It now means GBP/USD has fallen nearly 6% in the last month, which can have a huge impact on your future requirements.

To put the last months drop into monetary terms, converting £250,000 into USD will now see you receive around $21,575 less compared to trade in mid-December.

GBP/USD graph

 

Why has the pound fallen today?

The pound lost ground across the board today after weaker than forecast UK industrial production and manufacturing numbers. Figures released by the Office for National Statistics showed that industrial output had it sharpest fall since the start of 2013, while the manufacturing figure came in at -0.4% after a predicting reading of 0.1% growth.

Will GBP/USD recover?

At the moment there is very little evidence that the pound will start to recover. If anything there is more scope for the rate to carry on falling.

Events in China have caused investors to seek the safety of the U.S. dollar, especially as they now get a higher yield following the Federal Reserve rate hike last month.

We have also seen investors dumping the pound over the past couple of weeks as there is little chance we will see the Bank of England hiking interest rates anytime soon. In fact there have been rumours we won't see the BoE raise their benchmark rate until 2017.

So with the UK economy faltering and chances of a rate rise fading quickly we could see GBP/USD test the $1.40 barrier sooner rather than later.

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A slight recovery for GBP/USD

Good afternoon,

After Friday's positive jobs reading helped boost the dollar further against the pound, Sterling managed to claw back a bit of ground over the course of today. During Asian trade GBP/USD fell as low as $1.4491 but recovered to $1.4597 during the London session to lift some of the weight off the pounds shoulders.

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GBP/USD graph.

Not much to write home about!

2016 has not been kind to the pound and it is difficult to see things improving anytime soon. I know we are only eleven days in but the pound is currently one of worst performing currencies of the year.... Not exactly what everyone had been expecting!

With China rocking the boat again and the Federal Reserve increasing their benchmark rate, there is a grey cloud starting to form over the UK which shows no sign of disappearing. It could also get worse on Thursday when the Bank of England release their latest interest rate decision.

I don't think anyone is expecting the UK's central bank to raise interest rates this week so I doubt we will see any positive moves on the back of the announcement. However, we could see some movement on the back of BOE's minutes from the meeting which are released shortly after the rate decision.

The minutes will give us an insight to how the nine MPC members voted and if there is any change we could see some volatility in the market. For the past few months one member of the MPC has been voting to hike rates but if that changes and all nine members vote in favour to keep rates on hold we could easily see the pound weaken.

How far the pound will fall is anyone's guess but a change in mentality from the Bank of England would not send a positive message and I wouldn't be surprised if GBP/USD fell below $1.44.

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GBP/USD exchange rate falls again.

Good afternoon,

The pound lost more ground against the dollar during Thursday's session with the currency pair falling to its lowest levels since June 2010. Despite the Federal Reserve's December meeting minutes showing that some policymakers were worried about the level of inflation in the U.S the pound continued to slide against the greenback during the early hours of today.

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After falling to $1.4602 yesterday GBP/USD reached a low of $1.4533 before recovering slightly in the afternoon as the graph below shows. Weaker than forecast unemployment claims in the U.S. help put a temporary stop to the pounds woes, pushing the cross briefly back over $1.46.

Why has GBP/USD continued to fall?

It is mainly down to dollar strength, with fresh concerns mounting over the state of China's economy and the Chinese central bank looking to devalue its currency to help the country's exports investors are looking for safer options.

In times of uncertainty currencies such as the U.S. dollar and Japanese yen are seen as a safe-haven. This is exactly what we have seen over the past twenty four hours, with investors seeking the safety of the dollar and in turn making it more expensive to buy.

Will GBP/USD improve?

At the moment it is difficult to see the pound gaining any major momentum against the dollar. We might see some short term gains but at present I cannot see GBP/USD climbing back towards $1.50 anytime soon.

If the level of global uncertainty continues and the Federal Reserve look to increase interest rates again in the near future it is possible we could see GBP/USD fall even further.

As I mentioned yesterday I wouldn't be surprised if cable fell below $1.45 by the end of the week, especially if the U.S. have a positive jobs reading tomorrow and if things don't improve in the UK we could see the currency pair test the $1.40 level in the coming weeks.

 

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GBP/USD exchange rate falls to six year low!

Good afternoon.

The New Year has not started well for the pound especially against the U.S. dollar. Since the Federal Reserve raised its benchmark rate last month GBP/USD has been on a downward trend which at the moment shows no signs of stopping.

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During today's session the GBP/USD cross fell to its lowest levels since 2010 with the currency pair falling as low as $1.4602. It means the pound has now lost over 4% against the dollar since the 13th December when the mid-market price was sitting at $1.5232 as the graph below shows.

Why has the GBP/USD rate fallen today?

The dollar added to its recent gains today after a private report from the U.S. showed that companies had added the most jobs in year last month. ADP a payrolls processor said that employment in the private-sector has risen by 257,000 in December, the sectors largest gain since December 2014.

The report lends extra support the U.S. Federal Reserve will continue raising interest rates throughout 2016 and with the central bank set to release the minutes from their December meeting later this evening the dollar could be set for further gains.

If the minutes give any indication of when the next rate hike may take place we could see investors head towards the dollar in preparation of any announcement.

Jobs day!

On Friday the U.S. will release the official job numbers know as non-farm payroll. The job numbers usually cause a fair amount of volatility in the FX market. So if Friday's reading backs up the job report today we could also see the dollar benefit.

If there is a hawkish tone to the meeting minutes and positive jobs number on Friday I for one would not be surprised to see GBP/USD fall below $1.45 by the end of the week. At the moment I cannot see the pound recovering in the short term so unless something drastic happens we could GBP/USD remain in the $1.40's for some time.

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GBP/USD exchange rate back below $1.53

Good afternoon,

Last night's rate announcement from the U.S. Federal Reserve did not spring any major surprises but that didn't stop the dollar gaining against most of the other majors.

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When the news broke that the Fed were not raising interest rates this month you might have thought the market would have remained relatively flat. That was not the case though as the dollar strengthened across the board, pushing GBP/USD down almost a cent to a low of $1.5244.

The announcement left the currency pair at its lowest level since the 13th October and meant the GBP/USD cross had fallen 1.5% in just over week.

So why did the dollar strengthen?

Although the Fed kept rates on hold there was a positive tone to the announcement. In a statement the Federal Open Market Committee (FOMC) said they will continue to watch the global economy and the U.S. labour market for signs of improvement.

The vote showed that only one of the committee members voted in favour of raising the benchmark rate, Jeffery Lacker. While the remaining nine, which included chair women Janet Yellen voted to keep rates on hold.

Despite no action being taken last night the door is still open for the committee to act in six weeks' time when they meet in December. However, time is running out for the central bank to meet expectations of a rate rise this year.

Need to buy or sell dollars?

If you have an upcoming requirement to buy or sell dollars in the coming weeks it is important to know what tools are available to help you make the most from your transfer. Not only can I help you achieve a rate of exchange up to 5% better than those offered by the high-street banks, I can also help you get the timing right on your transfer to maximise your return.

For more information about how I can help or to find out what rate I can offer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

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GBP/USD exchange rates fall after poor GDP reading

Good afternoon,

The pound lost ground against the dollar during today's session following a weaker than forecast UK Gross Domestic Product (GDP) reading.

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The UK's economy slowed during the third quarter of this year following disappointing results in the manufacturing and construction sectors. Figures released by the Office for National Statistics (ONS) showed growth in the UK had fallen to 0.5%, down from 0.7% in Q2. 

The reading was worse than predicted by analysts who had anticipated the GDP figure coming in at 0.6%. It meant the pound started to lose ground against the U.S. dollar, with the mid-market price settling around $1.53 by the session close.

Could the Federal Reserve take action?

Tomorrow evening the U.S. Federal Reserve will announce their latest interest rate decision. Many within the market had expected the central bank to raise their benchmark rate six weeks ago but following the events in China the Federal Open Market Committee (FOMC) decided against acting in September.

Since then the economic numbers coming out of the U.S. have not been great and it would seem the market has priced in a rate hike coming in December. I think it is unlikely the FOMC will take any action tomorrow as the U.S economy has slowed in recent weeks.

However if the Federal Reserve hint towards a rate rise by the end of the year we can expect some volatility as it is likely we will see the dollar strengthen across the board.

Are you looking to buy or sell dollars?

If you have an upcoming requirement to buy or sell dollars in the coming weeks it is important to know what tools are available to help you make the most from your transfer. Not only can I help you achieve a rate of exchange up to 5% better than those offered by the high-street banks, I can also help you get the timing right on your transfer to maximise your return.

For more information about how I can help or to find out what rate I can offer, use the link below to complete the contact form or call me directly on 0044 (0) 1442 892 065.

Click here to complete the contact form.