After much news that the US economy was in turmoil and the dollar was growing weaker, analysts have finally seen some positive occurrences in this past week.  As of Wednesday the dollar rose against the GBP.  It seems there are many suppositions as to why the dollar has been on an upward swing for the Forex trading.

To start the US dollar rose on Wednesday as Gold rose in the UK.  The rise of gold prices there created a decrease for the GBP, and a rally for the US where gold actually lowered.  The GBP fell 1 cent before sweeping up again in the next two days.

In other sectors the price of oil was down yet again.  In the first two quarters of the year the price of oil for the US dollar was high enough to cause many economic issues.  However, with the recent weeks seeing a lower price on oil the US dollar has been able to gain some ground.  Hurricane Gustav helped a great deal with this due to the path it was supposed to take in the Gulf of Mexico.  The fact that the oil rigs were untouched has lent to the lowering oil prices in the US.

Analysts also believe the US dollar is able to rally against other currencies such as the GBP due to the credit crunch.  Perhaps it is the fact that the US has been dealing with it longer or maybe it is their approach, but analysts believe the readjustment during the credit crunch has actually strengthened the economy enough to help the dollar gain ground over other currencies where inflation and high costs are causing turmoil.

The US dollar has also had several liquidations of shorts.  This liquidation has gotten rid of some of the debt to help the economy boost itself back up.  The Fed did meet again in the 3rd quarter to discuss rate issues in regards to the current inflation.  However the Fed elected to hold the rate at the 2 percent mark for now.
This holding pattern again helped the dollar increase over the GBP and other currencies.

Lastly the analysts believe sentiment is returning to the US dollar making it stronger.  It has always been a strong currency for investing in and it seems many are beginning to think that again.  As the confidence in the economy and currency increases, the dollar rallies.