Pound/Dollar rates however, have dropped away from the recent highs of $1.36 which was the best it had been since the EU referendum. Comments from the FED chair Janet Yellen last night strengthened the USD, making it more expensive and pulling GBP/USD down to $1.34.
She said that they need to be careful not to raise rates “too gradually”, which markets have taken as a sign that there will almost certainly be another rate hike this year in the USA.
(A currency usually strengthens on rumours of interest rates going up, due to the higher return on offer for investors, which in turn increases demand.)
It’s still a pretty good level for those that need to buy Dollars, and with it looking more and more likely that interest rates in the USA will go up again this year, rates could fall further.
Most of the GBP/USD trades that we do for clients are for businesses that import their goods from China, and need to pay their suppliers in Dollars. We provide buying rates for Dollars that are about 2% higher than banks would offer. This may not sound like much, but on large volume transfers this small difference can save you thousands of Pounds.