The US dollar reached a 35-year high against sterling March, as investors flocked to the safety and security of this ‘safe haven’ currency. In a reminder that the currency markets can change very quickly, the interbank rate which did reach 1.1435 but has risen over 10 cents by this measure to 1.2479 yesterday, currently trading just below at 1.2337.
Will the GBPUSD level drop back to these 35-year highs? I have been speaking to many clients who missed the boat when it dropped to these levels and are anxious to see it go back. Whilst there is always a possibility in the currency markets, there is a notable change in the sentiments that drove s to that point.
And that is the key feature, ‘sentiment’. On the 19th March when this level was hit, we saw a peak of the uncertainty surrounding COVID-19 and the effects on the global economy. Since then, a raft of stimulus measures by the British and US governments and central banks, has all helped to increase confidence or sentiment towards the global economy.
Will the Pound to US Dollar Climb Further or Has It Peaked?
We are not out of the woods yet, we might not even yet be in the woods. The number of deaths and cases so far (sorry to use such a morbid measure but it does illustrate the point), is much lower than predicted outcomes. For example, in the United States which has the highest number of cases so far, there has been over 4000 deaths but numerous predictions in the news report the total number at anywhere from 100,000 to 250,000.
Sterling has also benefitted from this improved sentiment, as the UK will likely fare better in a stronger global economy. The UK relies heavily on its export of financial services to help keep the economy buoyant, and a quick recovery from this suits the sensitive nature of the British economy.
What will be very useful in shaping the movements from here on GBPUSD will be some of the latest economic data for both the British and UK economies, due this week. Today, tomorrow and Friday is the latest PMI (Purchasing Managers Index) data, before Friday sees the latest Non-Farm Payroll and Unemployment data, often a key market mover.
If you have any GBPUSD transfers, buying or selling US dollars for pounds, I would be most interested to discuss the range of factors driving the pair and what could lie in store ahead.
Thank you for reading and I would like to assure all our readers we remain very much operational to assist with any international money transfers throughout this time. If you would like to discuss the markets in more detail, please do contact me directly using the form below.
Keep safe and I look forward to hearing from you and discussing your situation soon.