Pound to US Dollar forecast: Will Sterling continue its decline against the USD?

GBP EUR Lower After Rishi Sunak Autumn Budget

For clients that are selling US dollars to buy sterling, current exchange rates are fantastic in comparison to the last 10 years. As its been heavily documented in recent articles, the pound to US dollar rate continues to devalue due to the ongoing Brexit saga and only up until the last couple of months, the US Federal reserve have been hiking interest rates which has strengthened the greenback.

Brexit is an issue that is not going away: EU still unwilling to renegotiate Brexit deal

Looking ahead, quite simply the Brexit problems are not going away. On the 23rd of July we will find out who will take over No10, however my personal opinion is that it’s irrelevant. The EU have made it clear they are not prepared to renegotiate and I believe they will stick to this as they know that MPs within the UK will not support a no deal Brexit. In addition, many commentators are suggesting that a snap General election may have to be called and I think this is the most likely option. Therefore for clients that are selling pounds to buy dollars or in fact any foreign currency I don’t see the pounds fortune turning anytime soon.

US Federal Reserve likely to cut interest rates

We now know that the Feds cycle of hiking interest rates is over, and in fact they are likely to start cutting interest rates in the upcoming months. US President Donald Trump has been putting major pressure on the FED stating that high interest rates are having a negative impact on the US economy, however the data doesn’t support it. Unemployment remains at record lows and jobs are being created, however there is a need to lift inflation and that’s why I think an interest rate cut may occur at the end of the month and once more this year.

When a central bank cuts interest rates the currency tends to devalue. Therefore, for clients that are buying US dollars there is an argument to suggest holding off until the interest rate decision at the end of the month, however you will also in that timescale find out who the next PM is which could cause fluctuations. for clients that are selling US dollars short term, exchange rates are fantastic therefore formulating a plan seems sensible. If you are buying or selling US dollars and would like assistance with currency exchange, feel free to fill in the form below.