Pounds To Dollars : All You Need To Know!
Welcome to another of my currency related sites, which I hope will
give you an
insight into the various factors that move the currency exchange
markets, and in particular on this site, we will be looking at
pounds to dollars. Now whether you are simply looking for the
best conversion rates for a holiday, buying assets overseas in dollars,
or looking for help and advice as a trader or investor, then I hope you
will find useful information which will give you a greater insight into
what moves the markets, and why one currency is weak and another strong.
Whilst we may not realise it on a daily basis, world currency movements
affect us all to a greater or lesser extent, and the pound to dollar
currency pair is one of the most widely traded around the world.
Some would argue that the US dollar has lost some of its dominance in recent years, and this is certainly true since the introduction of the Euro, which is now challenging the once mighty US dollar as the currency of first reserve. For those of you who have visited my other sites will know, I am a full time currency trader, and make my living from trading in these markets, so hopefully what you read here will be useful, and as I am not selling anything, I have no particular bias, one way or the other!
If you are looking for the current exchange rates, alongside is a currency converter which I hope you will find useful. The rates are updated several times a day, so they will always be up to date. If you would like a pounds to dollars quote for an asset then please just follow the link which will open in a new window and take you direct to the site. Please don't get a quote from your bank, as it will cost you a great deal more - the conversion rates will be awful, and you will pay a substantial amount in commission and fees. Please use a specialist broker such as HiFX who will get you the best inter bank rates, and in addition they charge no commission. So please just give them a try - a quote costs nothing! They can also arrange regular payments, so if you have an overseas mortgage exchange rates can be fixed in advance.
Pounds To Dollars : Introduction
For those of you who trade, the above chart will be very familiar, but
for those of you who don't please don't worry - it is very
straightforward and as I said earlier, the relationship between the two
affects us all in many ways, whether we are simply exchanging currency
for a foreign holiday, buying imported goods, or looking to invest
overseas. As one currency weakens, then the other strengthens and visa
versa. Imported goods from the country with a weak currency become
cheaper as we need less of the stronger currency to pay for them.
Similarly when we travel to a country with a weak currency, then we get
more of the currency to our own, as the conversion is working in our
favour.
Pounds to Dollars : Cable
Now as you probably know, all currencies are quoted in pairs. In this case we are comparing the exchange rate between pounds to dollars, also known as cable, as the first rates were communicated by a cable laid on the sea bed across the Atlantic. The above chart is called a Japanese candlestick chart, as each bar looks like a candle with a wick at the top or bottom. Where the price has increased overall on the month, then the bar is coloured blue, and where prices have fallen it is red. The chart goes back to 2003, and on the right hand side is the exchange rate for the period. The pair are always quoted as GBP/USD so the rate you see is how many US dollars you will receive for each pound. Back in 2003, if you had travelled to the USA on holiday, you would have received 1.55 dollars for each pound, whereas in early 2008, this would have increased to over 2 dollars to the pound - great news for UK buyers of American assets, but not good news as a US exporter or Americans travelling to the UK.
As we can see from the above chart, the US dollar has been weakening against the UK pound for several years, and is now at record highs for the pair. In fact if we go back to 1984, when the pair were virtually at parity ( one pound was worth just over one dollar), the US dollar has been in a steady decline since, and as recently as December 2007 reached the all time high of almost 2.12, a level not seen before. As a currency trader, the question I am always asked is where do I believe the currency is heading in the future - a critical question if you are thinking of buying and holding US dollar assets long term, or paying for these assets in US dollars. Naturally there are many factors which affect the long term relationship, so let's take a look at the fundamentals of both economies, and try to reach a view on the medium to longer term. Whilst I do trade technically by reading the above charts, my decisions and views are largely based on the broad world and country economics which will ultimately drive the relationship between the two currencies.
So let's start by looking at the UK economy and the economic factors and indicators which will affect the currency and the relationship of pounds to dollars and associated exchange rates.