The price activity for the GBPUSD pairing has changed considerably over the last 30 days. Rates have both reached a 18 month high only two weeks ago and now currently sit near a 6 week low this morning. In the table below you’ll see high to low GBP/USD exchange rate movement when exchanging £200,000 to USD during the last month.
|Currency Pair||% Change||Difference on £200,000|
The US bond market is incredibly important and influential in both the price of the US dollar and global financial strength. A US treasury bond is in essence a fixed interest US government backed security. i.e. an investment product that people can buy. These bonds however are tradeable and speculative and the returns can vary driven by demand.
Due to global economic conditions investors have been putting a lot of money into these bonds, which means they have equally been buying dollars to do so. This demand has pushed up demand for the US dollar over the last fortnight contributing to the GBPUSD pairing dropping by 2% this week. The demand for US bonds and the USD strength it is creating I personally expect to continue and as a result I see GBPUSD rates climbing by 2 cents or dropping by 4 cents in the near term.
Yesterday’s US data continued to show improvements with yet another improvement in job creation. Unemployment in the US is now the best or highest it has been in years, referred to as ‘full employment’.
The US economy has been expanding for more than eight and half years. Technically this period is the US’s second longest recovery in 150 years. Historically these kind of times of growth have however resulted in much bigger gains in disposable incomes which has been really quite small.
Today we have a large economical release in the format of GDP figures which are released at 13:30 today UK time. This is the first estimate for the first quarter of this year so the data it is based on is fairly thin. This normally results in the expectation being different from the real result. Currently it is expected to show a contraction which may result in the USD weakening in the afternoon session as traders price in this potential result. If however this forecast is incorrect and GDP figures are stronger, like in so many other examples from the US recently, expect the USD to gain once more before the weekend.
In real terms anyone looking to buy USD today may wish to move before this release whereas USD sellers may want to continue to hold for better levels still.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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