THE Pound is still trading at $1.35 today, its best level since September, as experts urged Brits travelling to the US to buy their Dollars now.
Sterling has been at $1.35 since December 23rd – its strongest position against the Dollar since mid-October.
It comes after predictions that interest rates may be cut faster in the US than the UK next year.
The US Federal Reserve is expected to deliver two more rate cuts next year – putting the Dollar under pressure.
The Bank of England cut interest rates to 3.75% earlier this month but inflation is still well above the 2% target at 3.2%.
The vote of five to four in favour of the cut showed the decision was on a knife-edge, meaning that rate cuts may be slower next year in the UK than in the US.
Holidaymakers heading to the US stand to benefit
Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said Brits travelling to the US “should buy their Dollars now”.
He added: “The Pound is trading at its strongest against the Dollar since September, offering a welcome opportunity for USD buyers. The Dollar has weakened after US inflation data showed a sharper-than-expected slowdown, raising expectations of more aggressive Federal Reserve rate cuts in 2026.
“Markets have reacted swiftly, driving the current Dollar softness. However, this strength in Sterling is built mainly on Dollar weakness, not UK economic improvement, so waiting until January could be risky.
“If the Dollar rebounds or sentiment shifts, these favourable rates may vanish. Holidaymakers heading to the US, property buyers and importers paying in Dollars all stand to benefit, while exporters and Dollar sellers may prefer to wait for the pressure to return to the Pound as the UK outlook dims.”
Excellent opportunities
Prem Raja, Head of Trading Floor at Currencies 4 You, said it was an opportunity to send money outside the UK.
He continued: “Sterling is currently trading at a 3-month high at 1.35 against the Dollar. This follows the most recent Bank of England rate cut and recent US data backing the case for further interest rate cuts across the pond throughout 2026.
“It seems this ‘Santa Rally’ is both Sterling strength (as GBP/EUR is also higher) and Dollar weakness, which is providing excellent opportunities for those who need to send money outside the UK, or for those on a Christmas break in the US.”
Forex is relative
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, cautioned against getting too carried away by the strength of the Pound.
She added: “Foreign exchange is a relative game. One currency can rise because the other is falling faster. A higher GBP/USD rate does not automatically mean your purchasing power is improving at home. Interest rate expectations have shifted against the Dollar.
“Markets see the Fed staying on an easing path, which reduces the appeal of holding Dollars. Short-term, sterling can rise on rate differentials and positioning. Longer-term, investors should not confuse a favourable exchange rate with a currency “getting stronger” in real terms: all fiat currencies can lose purchasing power over time, and markets often only notice late.
“Foreigners tend to be the first to realise a currency is overvalued, and they are usually the first to sell it. The public usually grasp it last. When they finally do, a currency escape boom can follow: people realise the currency is falling, not prices rising, and rush to swap cash for goods before it weakens further.”
Photo by micheile henderson on Unsplash.
