This US Dollar report examinse the factors that could affect exchange rates in the short to medium term in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low for the past month.

Currency Pair% ChangeDifference on £200,000

Interest rate forecasts push the USD up in value

Over the month of September the USD has weakened against the GBP by almost 6%. Over the last week however the GBPUSD has fallen by over 1.5% meaning a £200,000 transfer now gets you $4,500 less.

The reason for this has been a combination of investment flowing back into the USD as concerns about Korea escalate further but also commentary and updates on the potential next rate hike in the US.

The FED chair lady, Janet Yellen, spoke earlier this week which was titled “inflation, Uncertainty and monetary Policy”. In it she hinted that there could be a further central bank rate increase in the future.

New head of the Federal Reserve Jerome Powell indicates gradual rate rises throughout 2018

An interest rates change, and the forecast of a change has an almost immediate impact on the value of the currency in question. It changes the amount of return investors get from holding the currency, so changes the flow of investment and therefore the demand and price of the currency. In recent years there has also been an increase in popularity of speculating on currency movement to make profit, and this industry also has an impact on the value of currency.

Currently the FED is now expected to raise rates at their December meeting, as they have the last two years. This topic is highly likely to continue to impact the value of the USD. I personally do very much expect interest rates to climb in the US before here in the UK so generally I see the value of the USD climbing medium term, especially if you factor in the continual uncertainty in the UK around its future relationship with Europe.

USD expected to get more expensive as we end the week

Tomorrow there is also a number of large economic data releases from the US including; personal spending figures, PMI data, the Baker Oil Rig count and a speech from another member of the FED. Most of these are expected to show an improvement, strengthening the USD making it more expensive to buy. The one to watch however is the Oil count figures which are expected to show a steep fall following the shut-down of nearly a third of oil refineries in the US following the most recent hurricane season hitting the East coast.

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.

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.