Rate crash

The Pound has endured temporary collapse over night in mysterious circumstances, sparking market chaos. Having traded as low as $1.26 to the US Dollar on Thursday it slumped to $1.18 within minutes during Asian trading and fell by more than 6%.

Several theories are floating around as to why this might have happened but with no real clear explanation as to why. They include the publication of a report by the financial times on French president Francois Hollande demanding a tough stance on Brexit negotiations triggering a computer generated trading algorithm.

Another possible reason for this could have been “fat finger” trade, human error. The levels have recovered slightly in the early hours of this morning and we are currently looking at $1.24 against Sterling.

Buyers feel the pinch

Anybody who needs to purchase USD are feeling the pinch right now, with levels now at a 31-year low. There are many reasons for this seismic fall in value, many might describe it as “the perfect storm” but with the recent contraction in the economic data within the UK, and the expected interest rate hike expected over the coming months in the US. I expect there to be sustained pressure on GBP/USD buyers and for now there certainly does not seem to be to much light at the end of the tunnel. I think we are still 12-18 months away from seeing levels return to 1.30 mark and this could still be a distant dream.

Non-farm payroll data expected today

The first Friday of the month means one thing: the very much anticipated US employment figures. This is looked at as a key performance indicator as to the movements of interest rate change. This is well known to be extremely difficult to forecast because it vastly changes month on month and is really made up of small data. In this months case all early indications show there is likely to be an improvement in figures which might mean it will be more expensive to buy US Dollars in the build up to the results being released later today. For USD buyers there really is not much to look forward to, however I would certainly recommend registering a FREE trading account with us so that you may be in a position to move quickly if or when we see some peaks in the market today.

There has been speculation all year about whether the US FED will raise interest rates, so far we have not seen anything materialise. Having said this the much anticipated US election result could see a rise in interest rates as early as December and I personally think that if Hillary Clinton does win the race to be the next president, an interest rate hike could happen.

Further news on the UKs exit from the EU could cause Sterling to fall further, speak to our brokers today if you have an upcoming currency exchange and would like to know more surrounding Brexit.


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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.