This USD report will address the factors that could have an effect on exchange rates over the coming weeks. The table below looks at the difference between the rate you would have achieved when purchasing £200,000.00 at the low and high levels during the past month.
|Currency Pair||% Change||Difference on £200,000|
The US Dollar has dropped to its weakest point since the Referendum this week as mounting concerns over the US economy increase. Economic data released so far this year has not been quite as positive as some may have hoped and this pours doubt over the pace of further interest rate hikes for this year.
Whilst the White House released a statement saying the US President is in good physical and mental health, markets remain very sceptical about how effective Trump’s economic reforms to boost economic growth will be. 2018 is a crunch year for the President and negative headlines surrounding his aptitude for the top job do little to inspire confidence.
Other factors affecting GBPUSD’s 19 – month high include the Pound becoming emboldened by the progress on Brexit and a much stronger Euro which has seen the Euro hit a 3 year high against the greenback.
Another view on why the US Dollar is weaker is the US Dollar is a safe haven currency and in times of uncertainty it will generally strengthen. This is because investors will prefer to hold their funds in US Dollars as it is a seen as a safer and more stable option.
The opposite is also true so in times of certainty investors will seek higher returns globally and unwind their ‘safer’ US Dollar positions. Whilst it is good for investors to be holding US Dollars in the face of a rising US interest rate that should offer a higher return, seeing the US and global economy performing well has given investor’s confidence to search even further afield for even higher returns, hence the weaker Dollar.
If you need to buy or sell US Dollars than making plans around the upcoming data will be key to determining whether we soon hit 1.40 or fall back in the lower or mid 1.30’s. There are a series of Federal Reserve speakers this afternoon and jobless claims tomorrow.
Perhaps the most important news will be next Thursday’s US GDP (Gross Domestic Product) data and the interest rate decision on the 31st January. Highlighting your situation and perhaps making your plans in advance of these key events will give you the greatest chance of maximising your return and minimising your exposure.
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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