Federal Reserve member Esther George spoke to Bloomberg in yesterday’s trading session and made a few comments that gave the Dollar a little strength. More information on this and Trump's comments about recent Fed activity in today's USD report. The below table shows the difference in exchange rates during the past week and the potential returns you could have achieved when selling £200,00.00 during the high and low points.
|Currency Pair||% Change||Difference on £200,000|
George mentioned that she did not feel that Trump’s recent comments surrounding interest rates would get in the way of the Fed’s plans and that the committee is very much focused on moving forward with another two interest rate hikes this year.
For those readers that are not aware an interest rate hike generally can be positive for a currency as it makes it more attractive to investors, and even the mere speculation of a rate hike can give a currency strength too, which is why the Dollar gained back a little strength yesterday.
The Federal Reserve do appear to be well and truly on the charge and dedicated to raising rates consistently, and the higher they go the more likely that the Dollar will continue to get stronger.
We are witnessing a large flow of money out of ‘riskier’ emerging market currencies that have highly attractive interest rates (due to the level of risk) and placed into the Dollar as this is seen as a safer haven, lower risk and now has a fairly solid level of return in the current market.
The GBP/USD exchange rate really is about as hard to predict as Donald Trump’s twitter feed, and the recent conviction of two of his closest associates has added another element into the mix.
Although with a rising interest rate it does appear that the trend is well and truly in the favour of the Dollar, we may see this market turnaround at any time should Donald Trump start to find himself under huge pressure, which certainly isn’t out of the question.
This would lead to political uncertainty for the U.S (which is the reason many other currencies are suffering) and I would expect the Dollar to weaken off a little should these issues escalate.
There are still also new tariffs being slapped on each other by China and the U.S, which is another situation worth monitoring if you have a Dollar to exchange to carry out in the near future.
The U.S imposed 25% on tariffs on another $16 billion of Chinese goods, including chemical products, motorcycles, speedometers and antennas. China quickly retaliated with 25% on American goods such as chemical products and fuel.
With so many different elements out there that may alter GBP/USD exchange rates you really do need to have a proactive and experienced currency broker on your side. We we help you negotiate your way through this minefield of a market at the moment and can act as your eyes and ears on this volatile situation, helping you to get on with your day.
To contact one of our experienced brokers to discuss Dollar exchange rates feel free to call our trading floor on 01494 725353, or email me here.
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