Hopes of further interest rate hikes from the Federal Reserve could be looking up after positive economic data released last quarter and the inflation rise to 2.5%. The USD report looks at how this could affect USD rates in the medium term. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past week.

Currency Pair% ChangeDifference on £200,000
Positive US CPI Data could mean an imminent rate hike from the Fed

Its been a volatile start to the week for cable rates with movement of almost 1 cent in 48 hours. Despite this, the pairing has settled at around 1.34, which is up at the better rates seen last year, around December time.

The turbulence could to be attributed to the ongoing concerns regarding the Brexit negotiation process and last week’s unclear stance on UK’s post-Brexit position surrounding the customs union.

However, the current strength of the US Dollar is likely to continue as according to the US Treasury Secretary Steven Mnchin, trade wars with China have been ‘put on hold’ and China will reportedly engage in measures to ‘substantially reduce the US trade deficit in goods’ in addition to ‘working on expanding trade and protecting intellectual property’.

There is further longer-term optimism for the greenback, as positive economic data released in the last quarter, along with the rising inflation to 2.5%, has boosted expectations that the Federal Reserve will increase interest rates another 2 or even 3 more times this year.

Economic data this week

There are some key industry and unemployment data releases this week for the USD. Wednesdays Markit data is expected to show signs of expansion, whilst the jobless data on Thursday is expected to continue in line with previous data showing further improvement.

There is also the publication of The Federal Open Market Committee’s minutes this afternoon, which will provide a guide to the future of the United States’ interest rate policy and a speech scheduled for the chairman of the Federal Reserve Jerome Powell on Friday.

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.