Sterling to US Dollar Forecast August 2009

This morning, we’ll take a detailed look at Sterling GBP to USD. A quick morning glance at the currency exchange rates @ 08:30am 18th August 2009:

  • GBP/EUR 1.1596
  • GBP/USD 1.6394
  • GBP/AUD 1.9833
  • GBP/NZD 2.4376
  • GBP/CAD 1.8102
  • GBP/CHF 1.7628
  • GBP/ZAR 11.380

Sterling to US Dollar
The pound fell broadly yesterday, hitting its lowest level in a month against the US dollar as falling equities and oil prices encouraged investors to shun perceived higher risk currencies.

As we’ve said before, it’s now risk sentiment that’s proving to be the biggest driver of rates, GBP/USD in particular. As commodity prices fall, investors flock back to the safe haven of the US Dollar, causing strength and a decline in the rate.

Here we see the rate movement for the pound against the US Dollar for the last 3 months. AS you can see, the general trend has been a rise, which now seems to have come to an end. If you have a requirement to purchase US Dollars, then consider locking in rates with a Forward Contract.

There are 2 key times that are the best to buy currency. The best time is when the rate is at it’s peak. Of course achieving this is more luck than judgement, as nobody knows where the peak is until it’s been and gone. This brings me on to the second best time to fix rates; just after a peak once you can identify it. Looking at the chart above you can see this is exactly where we are now, so get in touch to discuss your requirement today, and dont be caught out by fast movements in the rate.

There is further concern that the buying rate for dollars may decline, as the pound was also dented by an earlier survey showing a fall in UK house prices, highlighting concerns that the UK economy may not be recovering as well as previously hoped.

The UK currency has come under broad pressure since the Bank of England increased asset purchases under its quantitative easing programme by more than expected earlier this month, saying Britain’s downturn looked deeper than previously thought.

The Bank of England’s quantitative easing move has hit sterling quite hard and in the short term it will probably continue to do so. Whenever there is any rebound in risk aversion like we have today then sterling is a convenient whipping boy.

The market will now watch upcoming data including July consumer prices on Tuesday, BoE minutes on Wednesday, and July retail sales and public finances data on Thursday for fresh clues on the economic outlook. For this week, look for the following data releases from the US:

Today – Building Permits, Producer Price Index

Wednesday – Crude Oil Stocks Change

Thursday – Initial Jobless Claims

Friday – Michigan Survey

Contact us to discuss how this data may affect your particular requirement to ensure you obtain the best possible exchange rate.

Todays Data
The US data is above, however today is also an important day for UK data. At 09:30am we have Consumer Price Index, which is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of GBP is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. We’re expecting a decline of 0.3% month on month, and a rise of 1.6% year on year. Any difference, and expect movement for the pound.

Also, we have The Retail Price Index released at the same time. This is a statistical measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It is widely considered as a key measure of inflation that indicates an accurate reflection of the cost of living. We’re expecting a decline of 0.2% month on month and a decline of 1.7% year on year. Again, any difference, and expect movement for the pound.

When you get in touch, ensure you mention you heard about foremost currency group through our Blog. Simply quote ‘Blog’

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