This US Dollar update looks at the impact of recent comments regarding the potential for further US interest hikes during 2017 and discusses factors that could affect USD exchange rates this week. In the table below you’ll see high to low GBP/USD movement and the difference when exchanging £200,000 Pounds to US Dollars during the last 24 hours.

Currency Pair% ChangeDifference on £200,000

Further rate hikes for the US?

The US Dollar strengthened against most of the major currencies yesterday off the back of comments made by New York FED President William Dudley. The president stated improvement in the US labour market should help increase inflation which in turn would put further pressure on the FED to raise interest rates at least once more before the end of the year. Past history tells us when a central bank raises interest rates the currency tends to strengthen as the demand increases.

This message is the complete opposite given by Governor of the Bank of England Mark Carney yesterday. Mark Carney confirmed that the Bank of England are not in the position to raise interest rates because of the uncertainty of Brexit, even though it was only 5 days ago when three members of the monetary policy committee voted in favour of raising interest rates.

Looking ahead it’s difficult to see how the Pound is going to make any inroads against the US Dollar when the FED are hinting at raising interest rates further and the Bank of England’s governor, Mark Carney has no interest in raising UK interest rates anytime soon. Therefore I expect GBP/USD exchange to remain buoyant in the mid 1.20s or to decline towards the lowers 1.20s. Consequently if I had US Dollars to buy I would start to make arrangements.

Economic data for the remainder of the week

The key data releases to look out for the remainder of the week are Initial jobless claims Thursday at 12.30, Markit Manufacturing coupled with Markit Services PMI Friday at 13:45 and New Homes sales at 14:00 Friday.

Initial jobless claims are set to show a slight improvement which could improve the US Dollars value Thursday and a small improvement is also expected for the Service data and New Homes Sales Friday. Therefore I am expecting a good finish to the week for the US Dollar against Sterling.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.