Will the Pound to US Dollar rate hit an annual low this month?

Pound to Dollar Rate Pushed Higher by Falling Covid Cases and Weak Dollar

The US Dollar rallied on Friday after the closely watched Non-Farm Payroll and Unemployment figures impressed, much to the delight of US Dollar bulls.

There has been some downward pressure on the US Dollar recently after markets began to plan ahead for interest rate cuts from the Federal Reserve Bank this year.

Despite many market commentators still expecting to see a 25 basis point cut at the end of this month, there are now less cuts expected throughout the year which is why the greenback saw gains. At the highest point on Friday the Pound to US Dollar rate, widely known as the Cable rate fell as low as 1.2480 which was the first time the GBP/USD rate has broken below 1.25 since December last year.

Will the Pound to US Dollar exchange rate hit the annual low soon?

Moving forward I think the annual low of 1.2442 could be tested especially if there is a change in the tone from the Federal Reserve Bank and we notice a more bullish tone.

Based on comments from US President, Donald Trump I think this could cause further friction between the central bank and his political team. He has previously commented that the Fed was overly aggressive in its tightening of monetary policy, and he’s been more vocal regarding the bank’s policies when compared with other US Presidents.

GBP exchange rates await the announcement of the next UK Prime Minster

The Pound has remained relatively flat with most of the recent price fluctuations being driven by the currencies it’s paired with. I expect this pattern to remain until around the 22nd of this month when the Conservative Leadership contest will come to an end. Once the new Prime Minister is in power we could then see some market movement as the next steps for Brexit will become clearer.

Economic data out of the UK is light this week, with the busiest day likely to be Wednesday when both Manufacturing and Industrial Production will be released at 9:30am.

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