It is currently just over the best time in 2 months to sell US dollars for pounds, as uncertainty over the Brexit looms. The US dollar is continuing to find favour. Despite concerns over the direction of future interest rate hikes, the dollar continues to be a very attractive currency to be holding, owing to the higher interest rates on offer.
Rise in US stocks helps fuel US dollar investment
A recent upturn in sentiment on the stock market, which has seen US stocks rise to near the record highs seen towards the end of 2018, has also helped fuel demand for US dollar investment.
It is likely that the more dovish approach of the US Federal Reserve, who have stated that they will be looking to at no further rate hikes this year, and could even be open to some cuts, will continue to provide the US economy with a large shot in the arm.
Pound Sterling volatility expected around UK local elections and European elections
Moving forward, there is an expectation that we will see increasingly turbulent times for the UK as we await the latest UK local elections on 2nd May, and then the European elections on the 23rd May. The Conservatives seem unlikely to do well and this could very easily weigh on the sentiments towards the pound.
Whilst Theresa May is still committed to her deal, there are growing calls for her to go, a poor elections showing will only heighten this mood. Sterling seems unlikely to perform well in such a scenario.
Will GBP/USD rates rise back above 1.30?
It now seems increasingly likely that the pound will remain on the weaker side, since it is difficult to see where any major strength would emanate from. The main source of some strength would be potentially the passage of Mrs May’s Brexit deal but there is currently no Parliamentary majority and it is difficult to see how Labour will support it.
Tomorrow is the latest US GDP (Gross Domestic Product) data which will shine some light on the recent performance of the US economy. The recent commentary of the US Federal Reserve that they might be open to interest rate cuts if needed, could ultimately weaken the US dollar.
However, with expectations that the US economy will only continue to carry on growing at a much faster pace than the UK, and also has more of a hold on its political issues than the UK, it seems likely the greenback will be the stronger on this pairing.
If you have a position to sell the US dollar or any currency connected to it, to buy the pound, then get in touch to discuss the latest news and trends. We can highlight strategy and options in order to help you secure more favourable levels. You can contact me directly using the form below: