The pound to US dollar rate has dropped following a stronger dollar being able to capitalise on the weakness of sterling.
Why is the pound to US dollar rate so weak?
It is of no surprise why the pound has been so weak, following a very tough time after the European elections. The US dollar however has been a little tougher to assess since the trade wars have broken down and on the face of it, many might expect the US dollar to be losing value.
Ultimately, the suggestions of a slower global economy will negatively impact the US economy, and this is already being shown in the data. Later today is the latest US GDP (Gross Domestic Product) data which might well influence US dollar exchange rates. A lower interest rate is paradoxically being seen as a benefit to the US economy and the currency at present, since it is indicative that perhaps the US economy will carry on for longer.
Pound to US dollar rate forecast
With the US offering much higher interest rates compared to the rest of the world’s leading economies, the potential for the US dollar to remain attractive seems quite high. Pound to US dollar rates have remained marooned under the 1.30 handle for a few weeks now and it is difficult to raise a case for a quick return above this important level.
Expectations ahead centre around the possibility of who will be the next Tory leader and who will take the lead in the Brexit negotiations. It seems that a top requirement for any possible candidate in the Conservative Party has to be a backing (or not ruling out) of no-deal.
This factor alone should keep sterling under pressure with a rising dollar looking quite merciless in continuing the dominance it has displayed in recent years. If you are looking to exchange GBP/USD then please feel free to contact me directly to discuss the latest news and market sentiments.