Seasoned FX analysts know that May brings with it more than the promise of more sunshine. Year upon year, the Dollar consistently appreciates against Sterling during the month of May.
This seasonal trend has, with the exception of 2016, been consistent since 2010 with an average increase in USD strength of just under 2%.
This May is proving to be no exception, as the Dollar has gained significantly on Sterling over the course of the month (2.56% at time of writing 14/5/20).
Here’s why: despite some reduced lockdown measures in the UK, the economy simply lacks the impetus to boost Sterling. The unwelcome return of Brexit headlines, which are invariably on the way, along with quantitative easing measures, mean that the Pound will continue taking hits.
Often viewed as a ‘safe haven’ in times of trouble, the USD is on the rise, for now. And as the UK battles with conflicting messaging and continued uncertainty over how long COVID-19 will hamstring the global economy – it appears that investors are betting on green.
Currently mid-month, it looks like the trend for Dollar strength will indeed follow form from years past and continue to dominate in May.
The real question is – by how much?
Contributed by Ralf Martyrossian – Ralf is a Business Development Manager at Privalgo, specialising in partnerships and property transactions. Along with passion and knowledge when it comes to financial markets and economics, Ralf is also an English Literature graduate from the University of Bristol. Besides analyzing currency charts, in his spare time, Ralf enjoys boxing, cycling and cartography.
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