GBP/USD pushing back towards $1.30

The past forty-eight hours has been nothing but positive for the GBP/USD cross, with the currency pair currently trading around three cents higher than on Tuesday morning.

After falling to $1.2707 the pound has been steadily rising and is now back within touching of the $1.30 barrier.

GBP/USD graph

GBP/USD pushing back towards $1.30

Why has the pound risen?

Although the dollar has weakened slightly over the past few days, the main reason GBP/USD has risen is down to comment from Bank of England Governor Mark Carney.

Yesterday afternoon Mr Carney hinted that the UK could be forced to raise interest rates before the end of the year, mainly because of Britain’s rising inflation figure.

His comments mark a dramatic U-turn for the BoE Chief, as only last week he stated that “now is not the time” to be raising interest rates.

Could GBP/USD break $1.30?

Possibly, but in my opinion I don’t think this is the start of GBP/USD climbing back towards $1.35+. Over the past few months we have seen the currency pair hit $1.30 on a number of occasions, but each time the cross has quickly fallen away.

Next week the UK will start releasing it economic data for June, and if the Manufacturing, Construction and Services sectors show any sign of slowing because of Brexit, we could easily see the pound give up the ground it has made over the course of this week.

However, if the data is positive, Brexit negotiations run smoothly and the Bank of England drop any more hints about a potential interest rate rise, then we might see the pound start to rise.

If the GBP/USD cross can break $1.30, then there is a chance it will keep going and we could see exchange rates push towards $1.32/$1.33.

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Written by
Arron Morris
Senior Currency Broker
T: 01442 892 065