Pound SOARS to highest point against the US Dollar for 4 years: 'Now is the time to buy for holidays in America and Canada'

THE Pound has soared to its highest point against the US Dollar for four years as financial experts urge Brits to buy your Dollars for your summer holidays now.

Sterling rose above $1.37, which is the strongest it has been since October 2021. 

While Sterling also rose to 1.87 Canadian Dollars, which is the strongest it has been since June 2016.

But the Pound's performance against the Euro is another story with it being stagnant at €1.17 for the last two weeks - down from €1.20 on May 28th.

Newspage spoke to experts who shared why they think the Pound is so strong against the Dollar - and why you should get your Dollars now if you're heading to US or Canada.

Prem Raja, Head of Trading Floor at Currencies 4 You, urged Brits to buy US Dollars now.

He said: "Sterling has climbed to four-year highs against the US Dollar, trading above $1.37; up nearly 10% since January. The recent surge is fuelled by political uncertainty in the US, including speculation around Trump fast-tracking a new Fed Chair, which has rattled markets. 

"At the same time, the UK’s resilient economic outlook and delayed expectations for interest rate cuts have kept the Pound well-supported. There’s potential for GBP/USD to push towards $1.40 in the short term before we see a meaningful pullback. 

"So if you're heading to the US or Canada soon, now is a smart time to consider locking in some currency, even if it goes slightly higher, current levels are historically strong. 

"Against the Euro, we haven't seen the same strength, largely because the Euro itself has remained firm, particularly as political risks in France are being digested. Still, Sterling remains in a strong position overall, and these are attractive levels to take advantage of."

Tony Redondo, Founder at Cosmos Currency Exchange, agreed that “now is an excellent time to buy” US and Canadian Dollars.

He continued: "The Pound hit a 4-year high versus the US Dollar due to USD weakness from Trump’s Fed pressure, geopolitical tension easing, and interest policy differentials between the Bank of England and the Fed. 

"Against the Canadian Dollar, the Pound hit a post-Brexit vote high as oil prices have dropped by over $10 a barrel in the last week. Now is an excellent time to buy both USD and CAD as the Pound could come under pressure next week if Starmer gets a thumping in next Tuesday’s Benefits Bill vote. 

“The markets hate political instability above all else. The Pound is muted against the Euro, which has benefited from capital inflows from US investors since Trump’s ‘Liberation Day’ tariffs announcement in April.”

Harry Mills, Director at Oku Markets, said while the Pound is strong specifically against the Dollar, it does not mean Sterling is doing well.

He added: "Sterling may be at multi-year highs against the US Dollar, but let’s be clear: this is 100% a Dollar move. Yes, the Pound has climbed above $1.37 to its strongest since October 2021, but this isn’t because the UK economy is booming. In fact, the UK’s economic momentum has faltered sharply since Q1. 

"After a strong start to the year, driven by front-loaded exports and domestic demand ahead of tax and wage hikes, April GDP shrank by 0.3%, retail sales slumped, and over 100,000 jobs were lost in May alone. 

“The Bank of England is now signalling a likely rate cut in August. Dollar weakness is the real story. The US economy is showing cracks: Q1 GDP was revised down to a 0.5% contraction, Moody’s downgraded the US credit rating, and political uncertainty is rattling markets. Investors are losing confidence in the Dollar as a safe haven and are turning to other assets such as gold.”

Faisal Sheikh, Managing Director at Monmouth Capital, added: "This is not about Sterling strength: the Euro has seen a similar increase and the US Dollar index, which measures its value against major currencies, has fallen to 97, a four-year low. What this means for UK investors is less certain. 

"FX rates tend to move in wide bands over years. Zoom out and Sterling has been in a range since Brexit between $1.20 and $1.40, with the odd exception such as the Truss / Kwarteng Budget in October 2022. In the several years before that, post-Great Financial Crisis in 2009, it oscillated roughly between $1.50 and $1.70. Currently a pound buys $1.37, within the post-Brexit range. 

“The most likely near-term move is a reversal, but more unorthodox US economic policy could see a break above $1.40 back into the higher range. Forecasting FX is fiendishly difficult. Investors need to think about their personal circumstances, such as what currency most of their liabilities and spending are in, when considering foreign currency exposure in their portfolios.”

John Woolfitt, Director at Atlantic Capital Markets, said he expected a US Dollar “rally” in the near future.

"The GBP is strong against the USD because the Bank of England has maintaining higher interest rates than the Federal Reserve, attracting yield-seeking capital into GBP assets. 

"The UK economy has shown resilience with steady growth and improving employment data. Meanwhile, the USD faces pressure from expectations of slower Fed rate cuts and inflation concerns. 

"This interest rate differential and economic stability create a clear current advantage for the GBP. Calling the exact right level to convert is always hard but I would take advantage of the USD weakness as President Trump is pushing the FED to ease policies which could lead to a USD rally. 

“Gains from the GBP against the Euro are far more stunted as the Eurozone is also showing signs of economic stabilisation and the ECB has kept rates relatively high much like the BOE, narrowing the yield differential with the UK. Political uncertainties in the Eurozone are less pronounced now, and the Euro benefits from safe-haven flows amid global risks.”