Over the last 10 trading days pound to US dollar exchange rates have dropped from 1.3170 to 1.2830 at the time of writing this article. To put this into monetary value a £200,000 transfer into US dollar now generates clients $6,800 less.
Many of my clients are questioning why exchange rates are falling when UK economic data for the UK over the last 10 days has actually impressed. Unemployment is at a record low of 3.8%, Trade Balance numbers are down, manufacturing/industrial production numbers exceeded expectation and GDP for the quarter increased to 0.5% when market analysts were predicting 0.2%.
Lack of Brexit developments causing drop in pound to US dollar rates
UK Prime Minister Theresa May’s announcement earlier in the week that MPS will vote on her deal at the beginning of the month has important significance. It appears that the cross party talks are over between the Conservative and Labour Parties and therefore Labour have a choice, back the deal or the UK may crash out of the EU without a deal. The reason why the chances of a crash out has increased is because if Theresa May’s deal is not passed its likely her position as PM will become untenable and there is a strong chance a Brexiteer will take over at number10.
Trying to second guess Brexit is difficult and quite frankly anything could happen. However an opportunity has presented itself for clients buying sterling with US dollars or any currency that is pegged to the US dollar. If you find yourself in this category I would recommend getting in touch to discuss your options in regards to protecting the gains you have seen in the last 10 days.
Upcoming data releases that may affect pound to US dollar rate
For the remainder of the week UK economic data is limited however there are a few data releases to look out for in regards to the US. Building permits and continuous jobless claims will be released at midday, the Michigan Consumer sentiment index will be released tomorrow at midday and there are two speeches late Friday by Fed members Clarida and Williams. For more information on how the data releases may impact your currency exchange or how Foreign Currency Direct plc can help you to save money feel free to fill in the form below to contact me directly.