Since December 2015 the US have increased interest rates a total of 7 times and already twice this year but I would be surprised to see another rate hike coming at this evening’s meeting. The Dollar report below discusses upcoming economic data and the interest rate decision to be made by the Fed tonight. The table below shows the range of exchange rates during the past 30 days, displaying the difference in return you could have acheived when selling £200,000.00 during the high and low points in that period.
|Currency Pair||% Change||Difference on £200,000|
The reason given by the Fed for the most recent rate hike at June’s meeting was owing to a strong labour market and that economic activity had been rising at a solid rate.
The current expectation is for another two rate hikes before the end of the year but I cannot see this talking place tonight. Previously the Fed have suggested that they would like to raise rates gradually and whilst there is some uncertainty surrounding global trade wars I think they will keep rates on hold tonight.
US GDP data reached a four year high recently and this has provided further support in favour of hiking rates in the world’s leading economy and this is why we have seen GBPUSD exchange rates struggle to break much past 1.31 over the last few days.
Indeed, the market has briefly flirted below 1.30 on a number of occasions during July creating some excellent opportunities to buy Pounds with US Dollars.
The Fed’s Monetary Policy Statement will be given shortly after tonight’s release so any further hints as to when they will look to raise interest rates, particularly if it may be coming in the near future, could see some further Dollar strength against the Pound. Therefore, if you’re thinking of buying Dollars it may be worth getting this organised in the near future.
We end the week with the US Unemployment rate for June combined with US Non-Farm Payroll data for July. In particular the US unemployment rate has been improving to close to its best levels in history at just 3.9%.
US GDP was measured at 4.1% in the second quarter the US appears to be going from strength to strength and this is why we are seeing such a strong Dollar and I think we could see further gains at the end of the week.
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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