Indeed, it has been an impressive run for the pound / US dollar rate since the release of last week's GDP data - and today we see the exchange rate a further 0.35 pct higher on last night's close at 1.5590.
[Please note, the above quotes are taken from the wholesale spot market; your bank will add its own discretionary spread driving up your currency costs. However, an independent FX provider will undercut your bank's offer, thus delivering you more currency. Please find out more here]
Shaun Osborne at TD Securities comments on the ascension of the GBP/USD:
"UK data was one of the few developments earlier in the European session, where a better than expected manufacturing PMI print has been the focus, boosting the GBP.
"That’s added another step in Cable’s trek higher, to a confluence of resistance at the 50% retrace of the Jan/March move lower, the top of the recent bull channel, and roughly the 100-day moving average. Like most of the big USD driven moves lately, GBPUSD’s 6 consecutive days of gains look a little overdone, and primed for a pullback."
|Live EUR/USD Chart
Right across the markets, the slide in the US dollar could be overextended
Indeed, it is not just cable that may be getting ahead of itself; Osborne believes a host of currency pairs could be doing the same. Osborne says:
"The broader slide in the USD looks a little overdone. Market expectations ahead of the Fed are perhaps running a little too strongly. with US equity markets at or near record highs in the US despite evidence of weaker growth, stocks seem to be wanting a lot more from the Fed."
However, the timing of the return of the US dollar is hard to call
"The reaction by the USD (in the wake of today's FOMC decision) is likely to be more muted than it otherwise would as tomorrow’s ECB decision and Friday’s nonfarm payrolls will be important developments," says Camilla Sutton at Scotiabank, alluding to the other events ahead that could also force currency markets.
Scotiabank have said that they do however forecast a return to strength for the US dollar:
"The USD has entered a period of retracement, weakening against most currencies in April (except the JPY), a trend which has been supported by relative central bank policy differentiation. However, once this phase of weakness completes we expect the USD to strengthen against the EUR, GBP and JPY into year-end on relative growth and central bank policy dynamics."