Pure FX Blog

18 May 2017

Sterling Hits 8-Month High Versus US Dollar, Outlook for Pound Bright

Sterling Hits 8-Month High Versus US Dollar, Outlook for Pound Bright

The pound to US dollar interbank exchange rate has hit 1.3046 today, its highest since September 15th last year, as UK retail sales rose +2.3% in April. Image credit: Wayne Langley.

by Peter Lavelle

Welcome to Pure FX’s latest update of the pound to US dollar interbank exchange rate.

Sterling jumps versus the greenback!

The pound to US dollar interbank exchange rate has hit 1.3046 today, its highest in 8 months, or since September 15th last year.

Moreover, looking forward, sterling could continue to climb versus the buck. Here’s why:

1. The pound may rise, because UK retail sales rose faster than forecast in April.

To be specific, UK retail sales climbed +2.3% in April compared to a month before, said the Office for National Statistics today, well ahead of financial market forecasts for +1.0%.

Last month, Brits made the most of the warm weather to splash out on gardening tools and home improvements, according to the ONS.

This may lift the pound, as consumer spending fuels the UK economy!

2. Sterling could climb, because UK unemployment hit a record low in March.

In particular, UK joblessness fell -0.1% to just 4.6% in March, the lowest unemployment rate since 1975.

At present, there are 31.95 million people working on the UK, 74.8% of the working-age population, also an all-time record.

This tells us that the UK economy continues to generate lots of new jobs, in spite of the uncertainty surrounding Brexit, thereby boosting the value of the pound!

3. The US dollar may weaken, because concern is rising over US President Donald Trump’s relationship with Russia.

To be specific, it emerged this week that President Trump may have told former FBI director James Comey to drop an investigation into Russia’s connections to Mike Flynn, Mr. Trump’s former National Security Adviser.

If this proves true, it would mean that Mr. Trump obstructed an FBI investigation, meaning that Mr. Trump could be impeached. In turn, this would weaken the US dollar!

4. The greenback could lose out, because construction of new American homes slowed in April.

In particular, US housing starts fell -2.6% last month, according to America’s Commerce Department this week, to just 1.17 million new units.

This was the 3rd monthly fall in construction in new homes in 4 months, and the lowest figure in 5 month.

This may weaken the US dollar, because if America’s construction industry is building fewer homes, this bodes ill for US GDP growth in 2017!

5. The buck could drop, because New York’s manufacturing output shrank in May.

According to the Federal Reserve of New York, factory production in the Big Apple state fell to -1.0 this month, well below financial market forecasts for +7.0%.

This was the 1st decline in New York’s manufacturing sector since Donald Trump won the US presidential election, 7 months ago.

In particular, new orders reached 1-year low in May, thereby hurting the value of the US dollar!

Get a free pound to US dollar exchange rate quote

Get a free pound to US dollar exchange rate quote to get our best exchange rate, and find out how much you could save with Pure FX.

You’ll get a pound to US dollar exchange rate guaranteed to beat your high street bank.

Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email peter.lavelle@purefx.co.uk.

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