Pound sees gains against the US Dollar
Sterling has made some steady inroads against the USD over the past week, recovering over two cents against the greenback. GBP/USD rates have closed on 1.28 this morning, with the pound hitting a high of 1.2783. Whilst the USD has found some support around this level, the recent sell-off of USD currency positions, seems to have coincided with the escalating tensions between the US & Iran.
With US President Donald Trump introducing tough sanctions on Iran, in the hope that it curbs their Nuclear development and force them back to the negotiating table, seems to have pushed investors away from the greenback.
Is the US fighting too many trade wars?
If the US continues along its current path, not only with its restrictions against Iran, but also the trade sanctions it has levied on both China & Europe, then the US economy may well start to suffer. China and Europe have responded with sanctions of their own against the US and the current climate is unlikely to boost global growth or drive investor confidence.
Whilst the US dollar is able to gain value during times of global uncertainty, due to its ability to hold its value better than other currencies during unstable economic periods, it does seem as though the greenback may have peaked against the pound.
Current levels offering US Dollar sellers value
Whilst market conditions have changed in recent months, with the UK entering a new phase in its history due to Brexit, we must remind ourselves that when we consider the relative history on GBP/USD rates, the current levels still offer a huge amount of value to USD sellers.
I am firmly of the opinion that there is far more downside risk than upside gain for those clients holding USD and whilst I’m not suggesting the market will be turned on its head anytime soon, any sudden spike in market confidence for the UK economy could certainly facilitate a rise back to and even through 1.30 against the USD.
If you would like to learn more on factors affecting GBP/USD exchange rates or have an upcoming currency transfer and are looking to get best value for your exchange, feel free to contact me directly using the form below. I look forwards to hearing from you.