The greenback was caught in its tracks during yesterday’s trading after yet another significant drop (-0.2%) in retail sales and industrial production (-0.5%) surprised the markets and sparked further reason for concern of a slowdown in US economic output.
|Currency Pair||% Change (Month)||Difference on £200,000|
With the Federal Reserve (Fed) having openly suggested to be looking at potentially cutting interest rates back down if inflation levels persist to slow, yesterday’s releases will have done very little to fill the markets with confidence.
Much of the dollar’s impressive drive back down of the lofty 1.35 mark on cable since June of last year can largely be attributed to the Fed’s multiple interest rate hikes.
Now that the baseline has largely been brought into question, could we see a longer-term change in trend for GBP/USD? Today sees key data from the housing and jobs markets, both keenly watched by investors as a precursor to the strength of an economy. If yesterday’s weak readings are reflected in today’s set, volatility could hit cable exchange rates. If you are in the market for US dollars make sure to get in touch.
The main driver for the dollar remains the ongoing trade tensions with China. In theory, with growing geopolitical uncertainty, safe heaven currencies like the US dollar draw attention from the markets as a result of investors tending to be more risk averse.
This has certainly been reflected in GBP/USD exchange rates so far this month. It is no coincidence that ever since President Trump increased tariffs on $200 billion worth of Chinese imports a fortnight ago, GBP/USD has fallen by 2.5%.
We are currently trading near the best levels to buy pounds with dollars in almost 13 weeks. Those in the market for foreign currency and are holding dollars may want to consider their positions.
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