At the turn of the year the market was predicting a series of interest rate hikes for the US economy, the shift in sentiment of late is actually quite surprising and just shows the danger in placing too high an expectation on the future, in the currency markets.

Currency Pair		% Change (Month)	Difference on £200,000
GBP	USD	3.7%	$9,401

Despite these concerns, the US dollar has been strengthening in many respects, with the market embracing the still higher interest rate globally, and the prospect that any cuts will only keep their economy the ‘best’ moving forward.

Today, there is a speech by Jerome Powell which will provide some insight for the market ahead of the actual interest rate decision due on the 31^st July. The market is predicting a cut of around 0.25% but depending on data this could change. Investors have been struggling with clarity on what kind of cut is necessary and when it should take place.

The recent NFPR (Non-Farm Payroll) data released has seen a big boost for the US dollar, briefly pushing GBP/USD interbank rates into the 1.24’s on Friday afternoon.

Will GBP/USD drop to new lows?

GBP/USD levels have nudged the 2019 lows seen in January, as investors continue to back the US dollar and lose faith in sterling. Sterling may continue to struggle until we know something firmer regarding the UK Conservative Party election result due on the 22^nd July.

The pound to US dollar has been trending lower ever since no-deal came back onto the agenda with Theresa May’s resignation, we could therefore expect that since Boris is likely to win the Tory race, and actively backs no-deal, we may see GBP/USD interbank levels struggling to push higher back into the high 1.20’s.

Looking at more global events, the recent G20 summit also showed that the trade wars are not as bad as the market anticipated and Trump’s ability to come out of bad situations, relatively unscathed is perhaps also providing the market with some clarity and confidence on the US dollar.

Clients with any GBP/USD positions could potentially benefit from a quick review of their situation and the latest trends and themes with their account manager.

Read our monthly currency forecast

Download here

News

27th March 2020

Ending the first week of ‘lockdown’ in the UK

As the first week of social isolation in the UK draws to a close, what impact have the significant anti-Coronavirus measures had on the global currency markets?

By Jonathan Watson

26th March 2020

Sterling Rally Short Lived

As the FTSE 100 found some restbite yesterday, sterling mounted a comeback against the euro reaching highs of 1.10 before surrendering its gains in the afternoon's trading session.

By Ben Fletcher

25th March 2020

UK Goes Into Lockdown

As the UK goes into lockdown, what measures have the Government and the Bank of England taken to support the economy?

By Amelia Spencer

N. Mans

Jonathan Watson as ever, ensures a smooth, reliable and trustworthy transaction for the second time of service! Delightful to deal with – efficiency personified. Thank you Jonathan. Would recommend highly – 5Star.

Read our testimonials

R. Sandell

Excellent initial guidance, and during the transaction regular communication and updates. Dealing with Jonathan Watson was a pleasure. Very reassuring.

Read our testimonials

C. Morris

Jonathan Watson provided very helpful advice throughout the process, as well as immediate responses to our inquiries. He and his team were patient and thoroughly professional, which helped us through some stressful moments following the sale of our property in France.

Read our testimonials