Daily, we are hearing the figures jump on the amount of tariffs Trump is planning to impose on China. We have gone $50bn to now $200bn being discussed quite rapidly and the markets are getting jitters. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points during the high and low points during the past month.
|Currency Pair||% Change||Difference on £200,000|
This is the one of biggest issues in the market at present driving not just the US Dollar, but also many other currencies. Investors are now gearing up for a further deterioration in the current sentiments which had previously appeared to be cooling. Driving the US Dollar too is the interest rate hike last week which has seen the US Dollar touch the best rates to buy both Pounds and Euros in 2018.
Essentially by destabilizing confidence in other economies and the belief the US will come out the least-worse off from any spats, the US Dollar is stronger. We can also put this down to some risk aversion with investors shielding their investments under the safe haven status of the greenback.
We have a very busy 24 hours with a parliamentary vote on Brexit and also the Bank of England tomorrow. Whilst the Trade War issue will continue to drive overall market sentiment, these Sterling based issues are important to track for GBPUSD clients. On balance an even stronger US Dollar against the Pound cannot be ruled out. I must say the move on GBPUSD lately has been staggering, we have had 12 cents movement in just 2 months. Unbelievably we were up to 1.4341 on April 17th, this is presenting an excellent opportunity for any clients holding not just US Dollars, but also any currency connected to it such as SAR, OMR, QAR. A $250,000 transfer back into pounds is getting you £15,700 more today than just 2 months ago.
A further boost for the US Dollar is interest rates, the US Federal Reserve raised their base rate to 2% last week, further fueling the strength of the currency. With the ECB pushing back any hike to the end of 2019 and the Bank of England dithering, further US Dollar strength cannot be ruled out.
Other US data is today at 13.30 Existing Home Sales and EIA Oil Stocks change, the price of Oil is absolutely another talking point on the US Dollar, there is an important OPEC (Organisation Petroleum Exporting Countries) meeting on Friday where any changes in output quotas, could see the price of Oil fall, an important driver on the US Dollar.
If you have a transfer buying or selling then why not highlight your position to your account manager today. For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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