Do you intend to transfer money to the USA from the UK in the near future?
This could be because you're emigrating to the United States, because you've been offered a job in New York or San Francisco. This might also be because you're studying abroad in the USA, at one of America's prestigious universities like Harvard or MIT.
Alternatively, are you a UK company owner, looking for currency for your business for the USA?
This could be because you intend to import US goods or services to the UK, and you need US dollars to make your payments. This may also be because you'd like to fix your costs in US dollars in advance, by hedging your currency risk with a forward contract.
Whatever the reason you're transferring money to the USA from the UK, you'll want a highly competitive exchange rate for US dollars.
This is because, the higher the dollar total in your US bank account, the more funds you'll have available to emigrate or study abroad, or for your business. In turn, this will make your life easier.
So what factors affect the pound to US dollar forecast? You might like to know this, because when you know what's likely to influence the value of British sterling versus the greenback, this will help you to decide when to transfer your money to the USA.
With this in mind, let's look at what factors frequently bear upon the value of sterling versus the buck:
1. The UK’s and The USA's Interest Rates.
A key factor in determining the pound to US dollar exchange rate is the UK’s and the USA's interest rates. Why? Well, because the world's money managers want to place their money in the jurisdiction that will offer them the highest return. In turn, the money managers can make higher profits.
As a result, these global investors keep a close eye on which country offers the highest interest rates, to decide where to invest. In turn, to invest in a country, you need to buy its currency. This lifts demand for the currency, which raises its value. So to sum up, higher interest rates tend to make a currency stronger.
So for you, a factor to keep in mind when you choose to transfer money is whether interest rates in the UK or the USA are higher. Also, it's often worth looking at whether the UK's central bank, the Bank of England, or the USA's central bank, the Federal Reserve, look set to lift or cut interest rates in future.
At the time of writing, the UK’s interest rate stands at 0.75%, while the US Federal Reserve has fixed interest rates at 2.25-2.5%. This gives the US dollar an advantage over British sterling, because the interest rate differential is in America’s favour. This can contribute to lift the value of the greenback.
2. The UK’s and USA's Economic Growth Rate.
In addition, a further influence in the value of the pound versus the US dollar is the UK’s and USA's economic growth rates. In particular, when one of these countries’ GDP (Gross Domestic Product) growth rates exceeds the other, this can often strengthen its currency.
This is because, when a country's economy expands, this signals greater economic prosperity. After all, when a country is growing quickly, its businesses will invest more in new equipment, or hire more staff. This signals more investment opportunities, which lifts the pound too.
To see when the UK or USA's economies expand, you can check Pure FX's GBP to USD Exchange Rate Updates page.
We'll tell you when the UK and USA's GDP growth exceeds or disappoints forecasts, and its effect on the pound to US dollar forecast. So you can use this information for your money transfer.
At the time of writing, the USA’s economy is growing notably faster than the UK’s. This is because, first, US President Donald Trump has significantly cut taxes in the United States. This gives consumers and businesses more cash to spend. Meanwhile, the UK’s GDP growth rate is being slowed down by Brexit.
3. The UK’s and The USA's Political Stability.
Another explanation that frequently affects the pound to US dollar exchange rate forecast is the UK’s and USA's political stability. After all, we live in turbulent political times, what with Brexit and Donald Trump’s presidency.
In turn, how these events unfold affects Great Britain’s and America's economic growth rate. This then influences whether the Bank of England or Federal Reserve lift or cut interest rates.
A good rule of thumb is that the foreign exchange markets like political stability. So when a country's political outlook looks calm, and its economy is growing strongly, this may boost its currency.
However, if there's instability like Brexit, or the US President is unpredictable like Mr. Trump, this might make international investors feel nervous.
In turn, global money managers may feel less inclined to own a currency, until its country's political outlook calms down.
4. How to Check The Latest Pound to US Dollar Exchange Rate, and Its Forecast.
To check today's pound to US dollar interbank exchange rate, just visit Pure FX's Rates & Tools page. Here, select 'GBP' to 'USD' from the currency buttons. You'll be shown today's pound to US dollar exchange, plus the exchange rate for the last seven days.
So you can clearly see if the pound is strengthening versus the US dollar. In turn, you can use this information to help you decide when to transfer money to the USA from the UK.
However, please keep in mind that the exchange rates presented on Pure FX's Rates & Tools page are the interbank exchange rates. These are the rates that international financial institutions use to transfer money to each other on a daily basis.
They can't be accessed by individuals or normal businesses. However, the interbank exchange rates still illustrate whether the pound to US dollar exchange rate is rising.
Meanwhile, for a pound to US dollar forecast, visit Pure FX's GBP to USD Exchange Rate Updates page. We'll tell you which factors are influencing the value of sterling versus the greenback lately, and which factors might affect it in future.
Again, you can use this information to help you decide when to exchange currencies with Pure FX.
I do hope you find this article helpful. If you have any other questions about how to transfer money to the USA from the UK, Contact Us. We’ll be delighted to help you.