Pound Marks Second Week of Recovery But Fall Still Likely to Continue

Pound Marks Second Week of Recovery But Fall Still Likely to Continue

The release of minutes from the Feds December meeting enabled the pound to enjoy a second week of moderate increase against the U.S. currency, however there is still a long way for the pound to fall.

Since Brexit the pound has continued to descend against the U.S. dollar, with few regions of increase along the bumpy path to the 1.2083 area reached in October, when the British currency hit a yearly low for 2016. However, the gains the pound has made since have been all but wiped-out, with considerable falls experienced in December – with three consecutive weeks of significant loses.

A falling dollar, stimulated by the release of the minutes from the Feds December meeting has afforded the pound a second consecutive week of gains, however it has not yet managed to reverse the considerable plummet experienced on the final trading week of 2016, in which the pound reached a low of 1.2229. Although the inauguration of Donald Trump on January 20 is expected to cause further falls of the dollar, the triggering of Article 50 at the end of March is expected to cause far more significant descent for the pound.

Analysts are increasingly considering the possibility of parity between the dollar and the pound sometime in the coming years, despite political volatility present in America, causing moderate falls of the dollar. A scenario of which once seemed almost unthinkable on account of its apparent impossibility is increasingly being considered seriously by analysts.

Chart from: https://www.dailyfx.com/gbp-usd

Showing weekly fluctuations in value of Pound Sterling / U.S. Dollar.

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