This morning has seen the pound give up the ground it made against the dollar during yesterday's session, with the GBP/USD cross falling to a fresh eight week low of $1.2111. For the best GBP/USD exchange rate click here.
After climbing to a high of $1.2250 yesterday the pound/dollar exchange rate has dipped as investors turn their attention back to the U.S. dollar, ahead of tomorrow's Dutch elections and the Federal Reserve interest rate decision.
With the dollar strengthening the EUR/USD cross has also fallen, with the currency pair dropping almost half a cent to currently sit at $1.0629.
GBP/USD twenty-four hour graph.
Will the dollar strengthen further if the Federal Reserve raise interest rates again?
We could potentially see further gains for the dollar tomorrow evening if Fed Chair Janet Yellen announces another interest rate hike. In theory a rate hike will usually increase the value of the country's currency due to the higher return on investors' funds.
However, the markets have been banking on the Federal Reserve tightening monetary policy for a couple of weeks now, so it is likely the rate increase has already been priced into the value of the dollar.
That's not to say we won't see any movement for the GBP/USD cross tomorrow. If Chair Yellen is positive over at the pace of future hikes, the dollar could benefit from increased investment flows into the U.S which would result in the pound losing more ground against its American counterpart.
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