This US Dollar report will examine the factors that could affect exchange rates this week 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 during the past 3 months.

Currency Pair% ChangeDifference on £200,000
GBPUSD2.1%$6,000
Will a new month bring a new range for Sterling exchange rates?

US Dollar gains continue

The US Dollar has continued its impressive drive against its currency counterparts throughout this week.

It has strengthened in particular against Pound Sterling, having gained nearly 2% as investors pulled their funds out of the volatile equity markets and plunged them into the safer Dollar, with multiple interest rate hikes expected around the corner. The number of which continues to be the main driver for US Dollar exchange rates.

The shift in sentiment has made a $200,000 transfer £4,500 more expensive and has left a number of our clients looking to buy US Dollars in the near future to consider their positions.

FED question value behind job market data before deciding on USD rates

The Dollar’s rise stems from last Friday’s impressive wage data but since then the Fed’s St Louis President Bullard has suggested that the recent strength from the jobs market may not necessarily lead to higher inflation levels casting the number of interest rate hikes in the US into doubt and leading investors to hang with caution before fully committing to the Dollar.

This adds further importance to the initial and continuing jobless claims releases early Friday afternoon as if these come through better than expected, the Federal Reserve might have more reason to take note and prepare for the “meaningful” inflationary pressures Bullard and the Monetary policy committee need to see before committing to the 3 interest rate hikes throughout this year. At present the markets are factoring in a 95% probability of a US interest rate hike in March with over 60% likelihood of 2 more throughout 2018.

New your Fed president Williams said yesterday the MPC’s views shouldn’t be too affected by the recent volatility in the markets, which suggests to me the Fed’s outlook for the economy remains positive, Long term Dollar strength should then be expected.

However, should these jobless data releases disappoint, those odds could potentially be slashed leading Dollars to seem less attractive short term making it cheaper to buy. If you are looking to buy Dollars with Pounds, it may pay to get in touch with your account manager so he can help you capitalise on market movement should a spike occur in your favour.

For more information on how future data releases could affect your US Dollar transfer, 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.