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.

 

Sterling falls to fresh lows

Sterling continued to lose ground against the greenback today as rates once again dropped below $1.60.
A lack of data releases from the UK meant that the pound was at the mercy of events around the globe and in today's post we will take a closer look at sterling's movements and the events that triggered this latest decline.

Over the course of the morning sterling climbed gradually against the dollar as markets reacted to the U.S beige book report from the previous evening and at its highest point mid-market levels reached $1.6040, well short of the $1.6150 we witnessed earlier in the week.

 

Yesterdays FED beige book (which consists of the 12 Federal Reserve districts) reported that the U.S economy is witnessing some growth, economic activity has picked up speed since November, thanks mainly to an increase in retail sales leading up to Christmas.

However, it was not all good news, the report also detailed that the manufacturing sector was still under performing and the fiscal cliff was still having a knock on affect on investor confidence. Unemployment still remains high on the FEDs agenda, they have indicated that reducing the long-term unemployment rate was a priority.

The gains that sterling made during the morning soon evaporated, US initial jobless claims came in much better than forecast and will have been seen as a major positive by the Federal Reserve. The consensus has been for the numbers to fall against the previous month but figures released actually showed the number of first time claimants had dropped by nearly 30,000 more than forecast.

As the data was released cable dropped by nearly 0.5% to hit a low of $1.5960 for the day. to reach it lowest levels for a number of weeks. With the pound seeming to come under enormous pressure, the potential for rates to carry on declining seems to be growing. Sterling has fallen across the board since last weeks GDP estimates and with the official figures due for release on the 25th we could see cable slip even further from the $1.60 mark.

To put the sudden drop into perspective a $200,000 dollar purchase would have cost you nearly £700 more after the decline and the  it once again outlines just how volatile the markets can be and how important timing can be. If you need to buy or sell dollars in the coming months click here to complete the contact form for a free, no-obligation consultation.

GBP/USD exchange rates lose over a cent

Good afternoon, today saw the pound lose the gains that where made last week against the dollar as poor euro-zone data increased safe haven flows into the states and increasing the value of the greenback.

Rates dropped from a high of $1.6154 to $1.6035 as euro-zone factory output fell again for the month of November, the decline is the third consecutive month and comes despite predictions of a rise.











Tuesday could see further movements as the UK data releases come thick and fast. Tomorrow we will see Retail and Producer Price index (RPI and PPI)  along with Consumer Price Index (CPI) for December. This will give another indication to whether the UK economy contracted in Q4 of 2012 and could fuel speculation that further stimulus is needed from the Bank of England (BoE).Most forecasts show they are expecting a rise in figures from November but following Fridays surprise negative GDP estimate the door is open for further declines.

Over in the states some analysts believe the U.S economy could be on the up, last week saw the U.S trade deficit widen as imports of consumer goods increased unexpectedly in November. Import of goods increased by $4.6 billion and could be a sign that the U.S retail sector is growing and that spending is increasing.

As mentioned in previous posts there seems to be a fair amount of focus on the UK at the moment and a run of poor data tomorrow and over the course of the week could well see GBP/USD rates drop back below $1.60.

With so much volatility in the currency markets it is vital to get the timing right on your currency transaction.With a number of currency contracts at my disposal we can work together to ensure your money goes as far a possible. If you would more information click here to complete the contact form for a free, no obligation consultation.