If the market was surprised by Sterling’s gains against the Euro, its drive against the greenback has been even more impressive. At the start of September, many tipped the 1.31 mark on GBPUSD exchange rates as a key resistance level to break and although sterling was building some momentum as the North Korean rhetoric brewed and hurricane Irma’s destruction began to weigh on the Dollar.

I doubt many expected the 4.7% gains we have seen over the course of the last 3 weeks. To put it into monetary terms, that’s $12,000 more on a £200,000 transfer, as shown below:

Currency Pair% ChangeDifference on £200,000
GBPUSD4.7%$12,800
Key economic data to move Sterling US Dollar this week

If I were holding Dollars at the moment, I would be taking note of the lack of reaction from the markets as the Federal Reserve gave clear indications they will be raising rates again before the end of 2017. In normal conditions, when the markets have reason to fully back a currency, Investors would have flocked by the masses toward it when higher returns on investment are promised. However, this week, the Dollar’s surge was short lived which suggest a distinct and worrying lack of trust in the Dollar. As a result, I find a push from the Dollar back down towards the 1.30 mark a very distant possibility for now. Yesterday, a mixed bag of manufacturing, housing and unemployment data did very little to bolster the Dollar’s value. The fact that Hurricane Irma’s devastation still has filtered down into those unemployment numbers suggests the worst is yet to come. If you are looking to buy Sterling with Dollars in the near future it may be worth moving before the full effects of this months natural disaster begins to take hold.

When should I buy US Dollars?

When the market is moving this strongly in your favour it is easy to get into the mind-set of waiting to see how far it can go. However, it is worth noting that cable exchange rates haven’t got anywhere near breaching the 1.40 mark since the referendum vote in June last year. That day, the Pound slumped by almost 13% against the Dollar.

The Pound’s value remains at the mercy of the UK’s negotiations with the EU and similar losses should be anticipated if talks do not advance in the near future. As a result, the 1.40 mark seems a touch too ambitious for now. I would be looking to trade on the next spike in the market to get as close as possible. If you are looking to buy Dollars, brief your broker on your requirement so he can act as your eyes and ears.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.

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