The US Dollar has been performing extremely well against sterling over the last 3 months and exchange rates have dropped over 13 cents (9%). To put this into monetary value for clients buying US Dollars a $200,000 purchase is now £14,000 more expensive. The below table shows the difference in Dollars you could have purchased with £200,000.00 Sterling depening on the rate at the time you traded.
|Currency Pair||% Change||Difference on £200,000|
Quite simply one of the main reasons why the US Dollar has been strengthening against the Pound is that the US economy has performed extremely well over the last couple of years. This was supported by Chairman of the Federal Reserve Jerome Powell the week when he told congress that he believed the United States was on course for years of steady growth and therefore more interest rates hikes were on the horizon. He even went on to say he wasn’t concerned about the escalating global trade wars.
This was supported by Chairman of the Federal Reserve Jerome Powell the week when he told congress that he believed the United States was on course for years of steady growth and therefore more interest rates hikes were on the horizon. He even went on to say he wasn’t concerned about the escalating global trade wars.
With the US set to raise interest rates another 2 times this year and most other major central banks leaving interest rates on hold at present, many leading analysts are expecting further US Dollar strength and I have to agree. Furthermore investors are flocking to the USD as a safe haven due to the global uncertainty created by ‘trade wars’ and the ongoing Brexit saga having a negative impact on the value of sterling, it’s hard to see how the pound will make any inroads against the USD short term. Therefore there is a strong argument to buy USD sooner rather than later.
Today the Organisation of Petroleum Exporting Countries also known as OPEC are set to meet to discuss further reforms. As we know this story has had an impact on the currency market and US dollar exchange rates therefore any key developments could influence US dollar exchange rates moving forward. Data is light for the rest of the week, therefore clients should look to next week’s existing home sales on Monday and Markit Services data Tuesday if involved with a US dollar trade short term.
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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