Could we see 1.15 for Pound to US Dollar exchange rates?

A recent analysis of GBP/USD by senior strategist at J P Morgan, Paul Meggyesi has painted a worrying picture for anyone with a USD purchasing requirement, stating the current mid 1.22 levels are significantly overvalued and unsustainable over the short term. Reaching a fair value of just 1.15 for the pair after modelling interest rate expectation differentials he cited two major uncertainties the UK will imminently face as the cause:

  • Increasing inflation (currently at 1.8%) is causing the UK economy to lose its momentum of impressive growth seen in the second half of 2016, is the UK beginning to struggle in the ever-looming Brexit?
  • Growing political and constitutional threat from Scotland could mean investors decide to protect their capital in the short term, sharply selling GBP for a safe haven currency whilst there continues to be any threat of a second Scottish referendum.

Amid a time the US is going from strength to strength under President Donald Trump and the UK is undergoing the biggest constitutional change in decades. If you have a GBP selling requirement it may be wise to secure your position now and lock in the current GBP/USD rates for up to 18 months through a forward contract for a small deposit to avoid disappointment if rates start to slip. Contact your broker here at Foreign Currency Direct to learn more about the wide variety of contract options available to you.

Economic data to drive markets this week

Today at 8pm we have Consumer Credit Change released for January. Produced by the Federal Reserve it gives an insight into the appetite of consumers for large expenses whilst also giving an indication of future consumer confidence within the US economy.

Friday will be one of the most pivotal days of the month for anyone with a US Dollar related requirement with non-farm payrolls, unemployment rate and participation rate all released at 1:30pm. Any deviation from the consensus can cause significant moves in the market, last month’s releases in February made a $200,000 transfer more than £750 more expensive over the course of just one day.

It may be prudent to detail any requirements you have to your personal experienced currency broker here at Foreign Currency Direct, in order to discuss options available and to provide peace of mind in regards to your currency transfer. Call us today on 01494 725 353 or email me here for the next steps.


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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.