Jerome Powell, new Few Chair has indicated that there could need to be as many as 4 interest rate hikes required, this is likely to further support the USD if the next meeting in March reaffirms this. The table blow shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points during trading yesterday.

Currency Pair% ChangeDifference on £200,000
GBPUSD1.05%$2920 USD

US Fed Outlook – Dollar Gains

US Gross Domestic Product (GDP) figures released yesterday showed the US economy grew slightly less than initially expected in the fourth quarter. GDP arrived at 2.5% having been revised down for 2.6%. Despite the small drop the rate of growth is still at a healthy level of 2.5% and signals the US economy is still strong.

US Fed Chair Jerome Powell has spoken for the last two days and has indicated that US interest rates may have to rise by more than previously expected. His personal view of the economy is that it has strengthened since the December meeting when the Fed raised interest rates and updated its interest rate outlook for 2018. The next meeting in March is now keenly awaited to see if there is a real shift in outlook or if the new Fed Chair is keeping the markets guessing. For the moment the markets are leaning towards a possible four interest rate increases in 2018 rather than what was believed to be three at the end of last year. Such a prospect should help support the US dollar and any good economic data should reinforce that view.

US jobless claims are released this afternoon and should give some more clues as to the health of the US labour market.

Trade wars with China still of great importance

Trump Scandal – Dollar Outlook

Expect more politically explosive news in the coming weeks which could have a bearing on dollar exchange rates. The investigation over alleged Russian interference in the 2016 election campaign continues under the watch of special counsel Robert Mueller and new lines of enquiry appear to be progressing. It has been reported that Mueller has been asking questions surrounding Trump’s business dealings with Russia before the campaign and looking into why the branding of a Trump Tower in Moscow never materialised.

Meanwhile Trump’s wall has got the go ahead after the courts ruled against an environmental challenge. He says that the wall is now on hold but will be built once the whole wall has been approved and funds are available.

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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