GBP/USD rates trading near a 5-month low

Pound to US Dollar Outlook As Sterling weakens will GBPUSD break below 1.20?

No signs of recovery for the pound

Sterling’s recent decline against the USD saw it touch a 5-month low during yesterday’s trading, with the pound showing no signs of staging a sustainable recovery anytime soon.

Whilst GBP has found plenty of support around and above 1.25, this threshold represents something of a bottom line for the pound. If broken, it would push sterling dangerously close to the 30-year lows it was trading at against the greenback, shortly after the Brexit referendum result. GBP/USD rates have been creeping lower for much of 2019, with the Brexit stranglehold severely impacting investors risk appetite for GBP.

It wasn’t long ago that 1.30 represented a benchmark for the pair, with the pound threatening to make a sustainable recovery above this level if the UK had managed to agree an exit deal with the EU. The UK government failure to do that and subsequent fragmentation, has added further instability to an already uncertain situation.

Clients holding GBP will now be hoping that the current bottom line is not breached and that a new Prime Minister, even if that candidate is not necessarily to everyone’s liking, manages to provide a clear mandate and Brexit strategy. This in turn will hopefully boost the markets confidence in the UK’s longer-term economic growth and at the same time free the shackles currently restricting the pound from any sustainable upturn.

Pound to US dollar forecast

Looking at the USD it continues to be well supported by investors. A combination of consistent US economic growth, a safe haven status, and a deteriorating pound have all combined, to help to push the USD up to its current lofty heights.

Whilst the current trend is showing no signs of cooling, it is worth remembering that the current levels offer fantastic value for USD sellers from a historical perspective. Add to this, the US Fed’s tone becoming far more dovish of late and a high change that they will cut interest rates sooner rather than later, and it may be that USD sellers are witnessing levels trading close to their peak under the current market conditions.

If you would like to learn more about the factors affecting current GBP/USD exchange rates, please feel free to contact me directly using the form below. I look forward to hearing from you.