I saw several reports stating the $/ will reach 1.70 soon. The last straw was a couple of export sites, including pricejapan.com are no longer offering $ sales to europe, only euros now. Will this only get worse ?
It has been above 1.70 to drift back to 1.66
The long term trend does appear to be up as it was under 1.4 two years ago.
You can't bank talk. No one knows where the rates will be in six months time. You can look at futures that will show you the average "bet" but there will be people betting above, below and against this. Anyone who knows for certain where rates will be may as well order their yacht now.
For information, not a prediction, the average bets are:
1 Month 1.67 2 Months 1.67 3 Months 1.66 6 Months 1.65 12 Months 1.63 24 Months 1.59It seems like the consensus (i.e. where the money is) is for the dollar to strengthen gradually.
This is based entirely on the different interest rates between the two currencies, such that you could put the money in a USD account and buy a future to convert it to GBP and you would have exactly the same money as if you put in a GBP account.
I disagree. Interest rates are the major factor, but if there was widespread financial support for a stronger or weaker dollar/pound in the future, then it would be reflected in the rates. If, as the original poster suggested, the rate was certain to reach 1.70 soon, then it would be reflected in these rates. Such pressure on exchange rates would in turn put pressure on interest rates.
If there was pressure for a stronger/weaker dollar/pound, that would be seen in the spot rates. Future rates must always be spot rates adjusted for differences in interest rates, otherwise there would be an arbitrage opportunity on the futures market.
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