Ben Small
Affiliate Relationship Manager
Is the Fed’s cautious stance justified?
Trade wars return with China reversing multiple promises made to the US.
Request a quotePositive data state side prompted yet another surge from the greenback with the GBP/USD interbank rate falling below 1.30 for the second time this month, highlighting just how volatile sterling exchange rates remain at present.
| Currency Pair | % Change (Month) | Difference on £200,000 | |
|---|---|---|---|
 GBP |  USD | 0.77% | $2,000 |
Yesterday, US mortgage application jumped by 2.7% up from the previous -4.3% reading from the month before, reflecting a pickup in overall confidence in the US housing market and indeed the economy as a whole.
It will be interesting to see how this afternoon’s producer price index and employment data come out ahead of Federal Reserve (Fed) Chair Powell’s speech. Powell halted much of the greenback’s momentum last month by suggesting inflation levels remain a major stumbling block ahead of any favorable change in the FED’s monetary policy stance. If yesterday’s positive house market data also filters into the employment and inflation figures today, Powell may be forced to take a slightly more optimistic tone which in turn could draw more attention back to the greenback and potentially forcing cable rates back towards the key 1.28 mark.
Friday’s major inflation data (CPI) may hold the most weight as the week comes to an end however if you’re in the market for dollars it may be prudent to consider your options well in advance.
Trade wars return
Of course, one of the major reasons for the Fed’s U-turn on it’s forecasted interest rate hikes resides in the uncertainty stemming from the trade stand-off with China, the implications of which continue to have decisive repercussions on the dollar’s value on the international stage.
The news yesterday of China reversing multiple promises it had made to the US back at the start of the year has once again clouded the outlook for global markets which could ultimately block any longer term greenback gains, forcing many US dollar holders to reconsider their positions.
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