UK Unemployment Pushes Sterling To New High Against Euro- 1.24 (Colm Gilhooly)

Pound to Dollar Forecast: GBPUSD Continues Upward Trend but for How Long?

This morning’s unemployment figures have pushed sterling to a fresh high against the Euro as the headline rate dropped from 6.7% to 6.6% and once again showed the UK economy is moving in the right direction.  Whilst the news in itself is unlikely to make the Bank of England change tack immediately, it is adding to the pressure that UK interest rates will have to go up sometime in the not too distant future.  Contrast this with the recent ECB interest rate cut and the fact they may have to consider further action if the Eurozone doesn’t turn around soon and it is easy to see why sterling Euro rates have been creeping up as forecast in previous blogs.

Against the Aussie and the Kiwi, the pound has been slipping of late due to better figures coming out of the Antipodes and China.  Aussie GDP was better than expected the other week and NZ retail figures last night were better than forecast.  We have the RBNZ interest rate decision due out later tonight and there is a lot of speculation over a rate hike adding to Kiwi Dollar strength of late- with both these currency pairs I think we are seeing some short term strength and probably worth selling in the not too distant if you are holding these currencies because I dont think it will be too long before UK data pushes the pound back up and the sea-saw of the last few months continues.

The USD has remained a little more range-bound against the pound lately with both posting relatively good figures.  Longer term I still think the Dollar will recover gradually when the Fed move away from their ultra dovish stance, but this could take months yet, so until then I think we could see the benefit of stop loss and limit orders for Cable.

 
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