Why has the pound lost ground against the dollar?

Since my post yesterday morning the pound has continued to lose ground against the U.S. dollar, with the GBP/USD cross now trading just above $1.2220.

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The pound has given up around half a cent against the dollar since midnight, with investors taking the view that Theresa May's hard Brexit approach is likely to hurt the UK economy.

GBP/USD graph

What would a hard Brexit mean for the pound?

If Theresa May and the UK government push ahead with their hardball approach it is likely to create even more uncertainty for the economy. The major concern for investors at the moment is that Theresa May looks like she wants to give up access to the single market in order to focus on immigration controls.

Giving up access to the single market could have disastrous consequences on the UK's financial sector, which is currently viewed as the financial hub of Europe and also makes up around 15% of the country's economic output.

The sector relies on the single market and its financial passports and giving up access could see companies leave the UK and head towards mainland Europe as they would be unable to trade freely.  This in turn would then cause a huge drop in investment flows that would then impact the UK's current account deficit.

 

How far could GBP/USD fall?

I still don't think we have seen the worst for GBP/USD yet. I for one would not be surprised if we saw the currency pair fall below $1.20 before the end of the year, and push towards $1.15 as we approach the government triggering Article 50.

Do you need to buy or sell dollars?

If you are looking to buy or sell dollars in the coming weeks and want to ensure you are making the most from your transfer, contact me today for a free, no-obligation currency consultation.

As a specialist in currency exchange, I have a wide 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.

For more information about how I can help or to find out what rate of exchange I can offer, click here  or call me directly on 0044 (0) 1442 892 065.

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GBP/USD forecast and update

The pound has given up some of the ground it made against the dollar yesterday with the currency pair falling back below $1.23.

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After rising to an eight day high of $1.2324 yesterday afternoon, the GBP/USD cross has fallen around half a cent and is currently trading at $1.2267.

GBP/USD graph

The pounds value has dipped after data published this morning showed UK retail sales were down in September.  According to the Office for National Statistics (ONS) shoppers held off from purchasing last month, with figures suggesting weak sales of clothing, footwear and food.

The amount of goods purchased remained flat compared to August but the pound lost ground as economists had predicted a rise from 0.0% to 0.3%.

It is thought the warmer weather in September is to blame for the lack of sales, but some analysts are worried the falling pound and a rising inflation figure could start to impact future trade.

Watch out for the ECB.

Later on today the European Central Bank (ECB) will be holding a press conference, which could end up effecting the GBP/USD cross. A few weeks ago the ECB hinted they could start to unwind their stimulus programme which is due to expire in March.

If President Mario Draghi confirms the central bank will start to cut the amount of money they are currently pumping into the Eurozone, we could see the euro strengthen which in turn could see the dollar weaken.

It could also have the opposite effect, if the ECB start to back track we could see the dollar strengthen as investors turn their attention back to the safe-haven currency.

Are you thinking of buying or selling dollars?

If you are looking to buy or sell dollars in the coming weeks and want to ensure you are making the most from your transfer, contact me today for a free, no-obligation currency consultation.

As a specialist in currency exchange, I have a wide 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.

For more information about how I can help or to find out what rate of exchange I can offer, click here or call me directly on 0044 (0) 1442 892 065.

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GBP/USD exchange rate hits an eight day high

This morning has seen the GBP/USD cross rise to its highest level in eight days with the currency pair hitting $1.2324, as you can see from the graph below.

GBP/USD graph

The pound rose after a lawyer for the UK government said that parliament would need to ratify any type of deal to remove Britain from the European Union.

The lawyer representing the government, James Eadie, is currently undertaking a the High Court challenge over who has the rights to trigger Article 50 and begin official divorce proceedings. Mr Eadie said yesterday that parliament and not just the Conservative party would ''very likely'' have to approve any exit agreement.  

His comments have given Sterling a small boost and even allowed the pound to shake of news that job creation had slowed slightly in the three months to August.  It would seem the markets are looking past the jobs data, as the numbers have shown very little has changed in the labour market since the referendum result in June.

 

Is this the start of the pounds recovery?

I think it is unlikely, although yesterday's comments have given the pound some support, I don't think it is the start of a sterling rally.

The markets are still concerned over the impact a hard Brexit will have on the UK economy. Unless the courts rule that parliament have to approve the triggering of Article 50, I think the pound will continue to be dragged down by the uncertainty over the UK's exit.

The general feeling is that the pound will continue to fall and the rise we have witnessed over the past twenty-four hours is only temporary. What the rise could do, is give investors an opportunity to restock their selling positions and if triggered could spark another huge sterling sell-off, just like the flash crash we saw a couple of weeks ago.

Do you have an upcoming requirement?

If you are looking to buy or sell dollars in the coming weeks and want to ensure you are making the most from your transfer, contact me today for a free, no-obligation currency consultation.

As a specialist in currency exchange, I have a wide 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.

For more information about how I can help or to find out what rate of exchange I can offer, complete the contact form on the right hand side of the page or call me directly on 0044 (0) 1442 892 065.

GBP/USD on the rise

The GBP/USD cross has risen over a cent since yesterday afternoon, with the currency pair hitting a high of $1.2294 this morning as you can see from the graph below. In today's post I will look at the events have impacted the value of the currency pair.

GBP/USD graph

Will the Federal Reserve raise interest rates again?

Investors have been asking this very question since the Fed raised interest rates last December. Despite the U.S central bank initially stating they would raise rates four times during 2016, ten months have passed and we are still waiting for that second hike.

The dollar has given up some ground over the past twenty-four hours as investors ponder the Fed’s near-term rate view. Although a rate hike in December is still on the cards, it is still far from a done deal with Fed Vice Chairman Fischer stating yesterday it was 'not that simple' for the Fed to hike rates.

 

UK inflation figure helps give the pound a boost.

 

This morning has seen the UK inflation reading rise to 1% and has given the pound a fraction of support. The inflation reading beat expectations and the current level is the highest rate since November 2014 and is now half way to the Bank of England's target level of 2%.

 

Do you need to buy or sell dollars?

If you are looking to buy or sell dollars in the coming months and want to make sure you are making the most from your transaction, contact me today for a free, currency consultation.

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GBP/USD drops below $1.22.

The GBP/USD exchange rate has fallen over half a cent so far today, with the currency pair dropping back to $1.2139 this afternoon.

GBP/USD graph

 

After hovering around the $1.22 during Thursday and Friday’s trading session, the pound has found itself on the back foot today after reports emerged about a potential rift within the Conservative Party.

According to The Daily Telegraph, Chancellor Phillip Hammond is on brink of quitting his post after he was excluded from government meetings for criticising Theresa May’s ‘Hard’ Brexit approach.

Despite the Treasury moving quickly to deny the claim, it has done little to lift the mood of investors and is likely create further uncertainty about the UK’s exit from the European Union.

Since the referendum result the GBP/USD cross has been in free fall, with the pound losing nearly twenty per cent against the dollar since 23^rd June.

The recent decline does not make very good reading from those of you looking a purchasing dollars, but for those that are selling it represents an excellent opportunity.

With GBP/USD at its lowest level since 1985, it is now an excellent time to repatriate funds back to the UK. If we look at the move in monetary terms, converting $300,000 back into Sterling will now see you receive almost £46,000 more compared to same transfer in June.

Will the GBP/USD exchange rate improve?

Over time I think it will but I still have a feeling things could get worse for the pound. Although the market has started to price in a ‘Hard’ Brexit, we also have to remember events in the U.S. will also have an impact on the value of the cross.

It is looking more and more likely the U.S. Federal Reserve will raise interest rates again before the end of the year, and if they do we will probably see the dollar strengthen.

It is impossible to say how far GBP/USD will fall but I would not be surprised if we see the currency pair dip below $1.20 before the end of the year.

Do you need to buy or sell dollars?

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

As a specialist in currency exchange I have a number of tools at my disposal to help you maximise the return of your transfer or protect you against adverse market movements.

For more information about how I can help or to find out what rate I can offer, complete the contact form on the right-hand side of the page or call me directly on 0044 (0) 1442 892 065.

GBP/USD exchange rate update

The GBP/USD cross has held around $1.22 for the second consecutive day, but fears over the future of the UK economy and the continued uncertainty surrounding the UK's exit from the European Union means the pound looks likely to struggle for the foreseeable future.

GBP/USD daily graph

 

 

 

 

 

 

Although the pound has edged away from the lows we witnessed last week, I don’t think this is the start of a Sterling rally. The pound is still being weighed down by concerns over Britain’s exit from the EU and the uncertainty is likely to increase in the build up to the Government triggering Article 50.

Yesterday's High Court hearing was a bid to give lawmakers more say over the countries exit, but with the timing and content still unclear, it is forcing investors to stay clear of the pound.

While the uncertainty remains it will be almost impossible for the pound to find any support and we could see the value of the pound fall even further in the coming months. Some forecasts are predicting the GBP/USD will fall as low as $1.15 by the end of 2016, with some banks suggesting we could even see the currency pair hit parity by March 2017.

I actually think parity is a little far-fetched, we have to remember the UK economy is still growing and continues to show its resilient side. Since the referendum result in June investors have been relentlessly selling off the pound but in my opinion they have oversold and is currently massively undervalued.

If we see the High court rule that Theresa May cannot trigger Article 50 without consulting Parliament then it could give the pound a huge boost. The issue for investors steamed from Theresa May's speech a few of weeks ago, when she said she would be pushing ahead with a “hard Brexit”.

A "hard Brexit" would see Britain give up access to the single market and investors believe it will have a severe impact of the future of the UK economy. However, if Theresa May is made to discuss the different options with her fellow lawmakers, it could lead to a softer approach to leaving the EU, and could see the pound regain some of the ground it has lost since the 23rd June.

Do you need to buy or sell dollars?

If you have an upcoming requirement to buy or sell dollars and are worried about how Brexit negotiations will impact the return of your transfer contact me today for a free, no-obligation currency consultation.

You can contact me by completing the enquiry form on the right-hand side of the page or alternatively you can call me directly on 0044 (0) 1442 892 065. 

 

 

 

 

 

 

GBP/USD exchange rate jumps on the back of lates retail sales reading

Yesterday saw the GBP/USD cross hold around $1.30 for the second consecutive day, with the currency pair bouncing between $1.2997 and $1.3051 throughout the course of the London trading session.

All eyes then turned to the latest Federal Reserve meeting minutes yesterday evening, as investors looked for any clues as to when the U.S. central bank would look to raise their benchmark rate for a second time.  

The minutes showed that policy-makers were divided over when the next rate hike should come with some Fed officials saying that current economic conditions would soon warrant another hike, while others still thought that more economic data and further improvement was needed.   

The result had very little impact on the FX market overnight and as the open of the London session approached the GBP/USD cross was trading around $1.3060.

The minutes confirmed the split messages we have heard from some Fed officials over the past couple days, so as it stands there is still a chance we could see the Janet Yellen and Co take action at their next meeting in September.  

Another boost for the UK economy.

Following a higher inflation reading on Tuesday, a drop in unemployment yesterday, this morning saw another positive data release for the UK with retail sales figures for July coming in much higher that forecast.

Many analysts had predicted July’s retail sales reading to improve to 0.1% (following Junes reading of -0.9%), but figures published this morning by the Office for National Statistics (ONS) showed that sales had increased to 1.4%.

The news gave the pound a huge lift and in the minutes after the data release the GBP/USD cross had risen to $1.3163, the highest we have seen the currency pair since the 7^th August.

 

GBP/USD graph after this mornings retail figures.

 

 

More importantly it means the pound has now gained nearly three cents against the dollar since Monday when the GBP/USD cross was sitting down at $1.2874.  

The last three days have shown that it might not be all doom and gloom for the UK economy following Britain’s decision to leave the EU on the 23^rd June.

It is still too early to say if the UK economy and the pound will recover back to pre-referendum levels anytime soon, especially as the government still need to trigger article 50 and negotiate our exit package.  

However, the early signs are better than expected and if eco-stats continue to improve we could quickly see the pound claw back some lost ground, which could push GBP/USD back above $1.35.

Buying or selling dollars?

If you have a requirement to buy or sell dollars in the coming months and want to ensure you are making the most from your transfer, contact me today for free, no-obligation consultation by completing the contact form on the right hand side of the page or by calling me directly on 0044 (0) 1442 892 065.