Monday 13th April 2015
Pound/Dollar rates hit 5 year low
The US Dollar has been gaining more and more strength recently, and has therefore become more expensive to purchase. First thing this morning the GBP/USD rate was as low as 1.4569 which is the lowest in 5 years. It’s climbed a little during trading to 1.4645. Still a far cry from the highs of $1.72 we saw last summer!
The reason is the US economy is performing very well, and it’s likely they will be the first major western economy to raise interest rates. Also, global uncertainty is driving investment into the ‘safe haven’ US Dollar, which also strengthens it. This is great news for anyone looking to convert Dollars to Pounds. Those needing Dollars however should note that many forecasts think the rate will continue to slide this year.
Sterling/Euro remains supported at €1.38
The strength of the Dollar is also causing weakness in the Euro. Issues over Greece means investors are moving from Euro to Dollar, which is weakening the single currency and keeping GBP/EUR rates supported above the €1.38 level.
I’m actually surprised the rate is holding at these levels, and I’m still of the view that as the election draws closer, Sterling will start to lose value against other currencies. Only on Friday figures showed weaker-than-expected industrial data, and the rising risk of prolonged political uncertainty after a tight British election next month is already dragging the Pound down against other currencies. Remember, the current high level is Euro weakness, not any fundamental strength in the Pound!
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What could affect exchange rates this week?
Below I’ve listed the scheduled releases for the coming week that I think may affect exchange rates. Remember that other things such as election uncertainty could also change rates at any time without warning. To discuss your currency requirement in more detail, or have a chat about which direction the exchange rate may go, click here to send a free enquiry today.
Tuesday 14th April 2015 – Quite an important day for the UK as we have the latest inflation numbers. Recent figures show the UK headed towards deflation, which could in turn mean interest rates going down. If that’s the case, the Pound could weaken. In Europe the only data of note is Industrial Production at 10am. Later in the afternoon in the USA we see the latest Retail Sales numbers. These are a good overall indicator of economic activity and so GBP/USD rates could be affected.
Wednesday 15th April 2015 – Nothing from the UK today, but plenty from the EU that could move GBP/EUR rates. Germany releases a host if inflation numbers at 7am, and at 12:45pm we have the latest decision from Europe in interest rates. They are unlikely to change the rate, but at 13:30pm they give a press conference, and comments made often cause volatility for the Pound/Euro rate. Elsewhere, Canada also announces interest rates, and the USA has Industrial production figures.
Thursday 16th April 2015 – Another quiet day for the UK. The only data of note today is in Australia where we see the latest employment figures, and the USA which also releases jobs data. Staying in the USA, we also have a speech by a FED member which could affect the Dollar.
Friday 17th April 2015 – After a quiet few days, this could be an important one for Sterling. At 09:30am we have the latest employment numbers from the UK. This can often affect the Pound so expect a volatile morning for GBP exchange rates. Europe, Canada and the USA all release inflation numbers today too, so GBP/CAD, GBP/EUR and GBP/USD could all change today.
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