USD/GBP Analysis and Forecast

USD/GBP
Figure 1: USD/GBP Chart (March 2019- September 2019)
Objectives
The given report aims to analyze the key factors which have impacted the USD/GBP over
the last 6 months and thereby forecast the possible market conditions during the upcoming 6
months. Based on this understanding of the market, suitable trading strategies ought to be
implemented.
Historical Data of USD/GBP
On March 13 2019, the USD/GBP was trading at 0.750. However, by the end of March, this
had increased to 0.765. From May 1, 2019 to July 31, 2019, there was a significant uptrend
in USD/GBP which may be reflected from the jump in USD/GBP pair from 0.77 to 0.823.
One of the key reasons contributing to this increase was the robust growth in US economy
along with stable interest rates. Additionally, there was the ongoing trade war between US –
China which further casted doubts on the global growth and thereby increased the tendency
of global investors to look at USD as a safe haven driven by the robust economic data
emerging from the US. On the other hand, situation in UK cannot be worst. This could be
primarily attributed to the uncertainty around Brexit and the impact that it would have on the
UK economy (Partington, 2019). The GDP growth as a result suffered as indicated below.

Figure 2: Comparison of GDP Growth Rate for USA and UK
Owing to the uncertainty around Brexit and whether the government would be able to secure
a deal with the EU, the GBP became a risky currency which further led to increased demand
of the greenback and led to uptrend in USD/GBP.
Another factor that can be used to explain the appreciation of USD against GBP is the rising
interest rate in the US while the interest rates in UK have remained constant during the
above period. This is highlighted below.
Figure 2: Comparison of Interest rate for USA and UK
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