For example, let’s say that you intend to transfer £100,000 to the USA, to buy a property in California. You look at today’s exchange rate, and it’s 1.20, which means you’ll receive $120,000 for your transfer.
However, you then look at the rate the next day, and it’s 1.30, in which case you’ll receive $130,000 for the same transfer. So, this is the best time to buy US dollars.
That said, it’s important to note that the pound isn’t strong against the US dollar on a particular day of the week or month of the year.
Instead, whether the pound to US dollar exchange rate is high depends on the UK and America’s economic performance. To be specific, if the UK’s economy looks like it’s doing better than America’s, we can expect sterling to strengthen against the US dollar.
With this in mind, when you hear on the news or read in the newspaper that the UK’s economy is looking up, or if America’s economy is trending down, this will very often be the best time to buy US dollars.
In particular, sterling could strengthen against the US dollar this year, because of Donald Trump. This week, the US President-Elect said that the US dollar is “too strong and it’s killing” America’s economy. This suggests that Mr. Trump will pursue policies that intentionally weaken the dollar.
If you intend to buy US dollars, this is fantastic news, because if the US dollars weakens, you’ll get more of them when you exchange currencies.
With this in mind, the best time to buy US dollars in 2017 could well be when Donald Trump complains that the dollar is too strong, weakening the US currency.
What’s more, the pound may also climb versus the US dollar in 2017, because of Brexit. For instance, just this week sterling has rocketed +4 cents against the greenback, to 1.24, its sharpest rise since 2008.
This is because UK prime minister Theresa May has confirmed that Parliament will get a vote over the final Brexit deal. It’s thought that Parliament will only approve a good Brexit deal, which would boost the UK’s economic outlook, and strengthen the pound.
Given this, if you hear good news about Brexit, this could well strengthen sterling, making it the best time to buy US dollars too.
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