Will pound to US dollar rates rise back over 1.30 before the New Year?

Could GBP/USD Rates be Heading Below 1.25 by Christmas

Will the pound to US dollar rates rise back over the 1.30 level is a key point of concern for any clients with a position to buy US dollars with sterling. There is a growing expectation that this will only really result from a change in market sentiment toward sterling which is proving very difficult at present.

Firstly, the main driver for the pound looks set to continue to be the Brexit and the key factor on Brexit is the Parliamentary vote on the 11th December, next week. We will need to see the vote go Theresa May’s way, which might well then trigger a spike in sterling.

The current position however, is that it appears unlikely the pound will rise as Theresa May is not expected to be able to get the vote through the House of Commons. There is a huge amount of pressure on Mrs May to be able to deliver her vote, if she fails then she might well find she is forced to amend her legislation or indeed a vote of no-confidence is triggered in the House of Commons.

Overall, there is a belief that the future direction on the pound is likely to be negative since even if the deal is passed, there will then be a whole new set of questions over just what type of deal the UK will ultimately end up with.

US dollar strength likely following Federal Reserve interest rate decision

Important news to drive US dollar rates too stems from the prospect of the US Federal Reserve and their interest rate decision on the 19th December, this seems likely to lead to a stronger US dollar in the future. However, if they do not make the hike or voice concerns over future hikes, the US dollar should weaken.

The vote on the final EU Withdrawal Bill in the UK Parliament and the Fed decision are the main events in December to monitor for clients looking to buy or sell US dollars. It is difficult to paint an overly positive picture for US dollar buyers, who might wish to look at making plans sooner than later to manage the risk.

For US dollar sellers, the market is close to the best we have had in 2018, so some careful plans about maximising the opportunity without taking too much risk might prove the best way forward.

Thank you for reading and please contact me if you would like to discuss pound to US dollar rates in more detail. You can send me a message directly using the form below. I’ll be happy to respond personally and discuss your queries.