The US Dollar spiked on the news of a Brexit as investment shifts towards the safe-haven currency.
This week’s hard fought comeback against the dollar was undone yesterday, as investors hedged their bets following the news that the UK could be set to cut their interest rate this summer following the Brexit. Cable rates rose nearly 3 cents from the low of 1.31 after the Brexit this week, having dropped from 1.50 exactly a week ago.
The dollar has been the biggest beneficiary from the Brexit, as investors have placed their funds into the dollar to protect themselves from the market volatility.
In the week leading up to EU referendum in the UK, it looked certain that the UK would remain in the EU and therefore global risk would subside, paving the way for a future rate hike in the US. As a result of the Brexit, the chance of a rate hike has diminished this year and the likelihood of the US also being faced with a recession have increased. The UK and the Eurozone are two of the US’s main trading partners, as complications arise overseas the US is bound to feel the negative effects.
Currently the US Dollar is at a two decade high against the pound. I would be tempted to buy sterling now whilst the rates are favourable. The implications of the Brexit, a possible recession and US electoral year could severely weaken the greenback in the upcoming months.
If you are looking at selling your Dollars in the next few months, it may be worth looking at securing the rate now before the impending weakness as discussed above. The team at currencies.co.uk have a range of tolls to help you to maximise your returns, such as limit orders and forward contracts. To Find out more please get in contact with your currency expert.
Have any questions or concerns about the Brexit? We would love to hear from you! Call us today on 01494 725 353 and one of our brokers will be available to take your call.
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