After keeping interest rates on hold recently the US Federal Reserve are most likely looking to cut rates later this month. On Monday US President Donald trump urged the central bank to lower interest rates in order to weaken the value of the US dollar.
|Currency Pair||% Change (Month)||Difference on £200,000|
Trump went on to say via Twitter that ‘with almost no inflation, our Country is needlessly being forced to pay a MUCH higher interest rate than other countries only because of a very misguided Federal Reserve.’
Trump has been in favour of cutting interest rates for quite some time and although he is not allowed to directly influence the Federal Reserve he keeps making the comments.
The Federal Reserve is expected to cut rates but by how much is the real question. The expectation is for either a 25 or a 50 basis point cut. The interest rate cut is expected it take place in an attempt to help increase inflation as well as protect the economy from the problems caused by the ongoing US China Trade War.
Tomorrow afternoon brings with it the latest Initial Jobless Claims data. At the same time the US will also release the latest Trade Balance figures. This may provide data to help the Fed make a decision when they meet next week.
Arguably, the main data release for this week to concern anyone with a US dollar transfer could be Friday afternoon’s US GDP data for the second quarter. The expectation is for growth of 1.8% which is lower than the first quarter of 3.1%.
With the data showing a fall this may provide the central bank enough ammunition to cut rates next week. Therefore, we could see a small drop in the value of the pound vs the US dollar if we see a rate cut by 50 basis points. Therefore, if you have a US dollar transfer to make you may wish to pay close attention to next week’s interest rate decision.
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