A Tug of War of Pound vs Dollar
The pound vs dollar exchange rate has been on a consistent battle of push and pulls. In mid-2016, the US dollar has enjoyed its glory days against the pound, when the British currency suffered a major blow due to the decision of the United Kingdom to withdraw from the European Union. Sterling was dragged down to as low as 1.20 dollars per pound.
Fast forward to 2018, the tables have been turned against the dollar and the British pound is slowly constructing
its road to recovery.
Holding tighter to the rope
The performance of the pound vs dollar gets really interesting for many investors. It seems that that the zenith of USD has finally reached its end while the sterling holds tighter to the rope to get its nose ahead in the competition.
The pound vs. dollar pair is one of the most tradable quotations with the world-leading currencies. The values of both are affected by the economic indicators and political events within the US and the UK. Monetary policies and inflation rates are the factors that strongly influence the USD and the GBP.
With the latest news about Brexit and the US elections, the values of the pound sterling and the dollar are hard to predict. It means that traders need to focus on the fundamental analysis to craft optimized tactics while trading this particular pair.
To start the year, the greenback sustained its struggles as the US dollar index that gauges the performance of
USD has closed below the 90-level against major rivals for the first time in many years.
The movement of Dollar vs Pound
From enjoying the 95-level in the post-Brexit vote and post-US elections, the US dollar gave up most of its strength and it looks like the downward trend will continue for a long term, with the Federal Reserve’s interest rates, the improvement in global economy, and the impact of Donald Trump’s tax reform seen as the major driver.
Furthermore, investors have finally turned bullish on pound vs dollar and more gains are expected to come in the next weeks and months. In the last week of December last year, asset managers hailed sterling as one of the only two currencies with bullish sentiments.
One of the main reasons why the pound vs dollar kicked off a strong start was because of fading uncertainties
concerning the controversial Brexit vote. Investors cheered on the analysts’ expectations of a possible soft
Brexit due to Prime Minister Theresa May’s lack of political capital.
What is the value of GBP / USD?
Another major boost to sterling’s campaign is the projected uptick in UK’s economy. Supported by a strong manufacturing, the overall economy jumped by 0.5% in the final three months of the previous year.
With this positive momentum, the UK economy is expected to maintain its composure this year, which could support higher wages and lower unemployment rate that could fuel the demand for British pound.
The pound vs dollar war continues. Investors should carefully inspect the market. If not, they might fall into traps they ought to avoid.
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