Best Time to Sell Dollar, Buy Pound Exchange Rates Since Nov 2013: GBP-USD Under $1.60

October 5, 2014 - Written by James Fuller

STORY LINK Best Time to Sell Dollar, Buy Pound Exchange Rates Since Nov 2013: GBP-USD Under $1.60

The UK Pound to Dollar exchange rate plummeted on Friday, falling below the $1.60 benchmark, resulting in the best time to buy the USD GBP conversion pairing since November 2013

The drop in Sterling came following highly favourable US unemployment data which showed a six-year low in US joblessness.

Furthermore, the US economy created 248K jobs in September, far higher than the initially forecast 215K and August’s revised 180K jobs gain.

Forex expert Greg Anderson commented: ‘The whole flavour of the report is very positive—frankly I’m surprised Dollar hasn’t rallied more. The doves will be really clutching at straws to find something they don’t like.’

US Dollar Exchange Rate Rallies Higher on Jobs Data

The ‘Buck’ has reached impressive four-year highs on Friday as the Unemployment Rate tumbled to its lowest since 2008 at only 5.9%.

The collapse of the Lehmen Brothers Bank in 2008 crashed the market and signalled the onset of the global financial crisis.

Since then, economies all over the world have been attempting to recover.


Now in 2014, after years of record low borrowing costs, expectations relating to interest rate hikes are becoming more focussed.

If the US Federal Reserve increases borrowing costs in the near future, they could become the first of the Group of Seven (G7) developed nations to do so since the onset of the great recession.

The Federal Reserve has previously stated that the timeframe for interest rate hikes would depend on the data, with particular focus on the employment sector.

Investor Richard Schlanger stated: ‘The Fed has to feel we’re making progress and it’s time for them to consider tightening.’

Meanwhile, the Pound has flopped against other majors, sinking down to below the $1.60 mark on the back of poor UK data. Markit’s UK Services Purchasing Managers Index (PMI) showed a drop in growth in September, with the gauge reading 58.7 following August’s 60.5. Industry expert Neil Jones commented: ‘The Pound is being sold today, suggesting the longer-term Dollar bull trend is slowly returning to the foreign-exchange market. Pound-Dollar was sold after the UK PMI data.’

The Bank of England (BoE) is expected to meet next week to make October’s bank rate decision. Friday’s figures won’t offer support to hawkish BoE members who wish to see an increase in interest rates in the near future. There has been much speculation in recent months as to which economy, the US or UK, will be first to order a rate hike. Mizhuho Bank spokesperson Neil Jones suggested: ‘The Dollar is performing well across the board after the Non-Farm Payrolls data and Pound-Dollar is lower as a consequence. Data divergence is behind the Pound-Dollar move. The market will be revising interest rate increases. Some expectation may result in forecasts for a Federal Reserve hike prior to a Bank of England hike.’

Forecast: What's in Store for the Pound to US Dollar Exchange Rate?

Looking ahead to next week, Monday will be a quiet data day for both the UK and US.

However, Tuesday may see more movement for the GBP to USD exchange rate on the release of UK Industrial Production, Manufacturing Production and Gross Domestic Product figures.

Tuesday’s data needs to be favourable if the Pound hopes to recoup any losses from this week.

Wednesday may offer support for the US Dollar when details of the Federal Reserve’s most recent policy meeting are published. Meanwhile, the Bank of England’s Rate Decision is scheduled to take place on Thursday.

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