Steve Eakins
Director
GBP/USD reaches near 3 week low
GBP/USD rates drop as we near the 12th April deadline, despite worrying US yield curve concerns.
Request a quoteGBP/USD rates have been moving in nearly a straight line in a negative direction, making the USD more expensive to buy. A majority of this movement has been attributed to the concerns around Brexit which will remain a large driving force going forward. Over the last 3 weeks GBP/USD interbank rates have fallen by over 3 cents or 2.8%. Based on the interbank rate £200,000 is worth over $7,000 less over the last 21 days showing the current direction of the market.
| Currency Pair | % Change (Month) | Difference on £200,000 | |
|---|---|---|---|
 GBP |  USD | 2.85% | $7,500 |
US yield curve suggests concerns
The economic health of the USD has been a talking point recently. The economy certainly wobbled over the last few months recording a surprisingly large drop in job creation in February with only 33,000 jobs created. This was a contributor to the US yield curve falling into recessionary territory for the first time in ten years.
The US yield curve measures the gap between interest rates returns over a 3-month period against ten-year government bonds. Interest rates are set by the banks whereby long-term returns are set by the market's expectations for growth. So, when 3 month's interest gave a better return than a 10-year bond back in March the media was full of worrying commentary. For example, each of the last seven US recessions have been preceded by such an inverted curve, however normally this is for months at a time rather than a few days like we saw. Meaning it may be too early to predict a recession but it’s not too early to worry about one.
US consumer spending in focus today
Growth within the world's largest economy is expected to be strong, Deloitte recently surveyed economists to predict future growth. The average expected a 2.4% expansion in 2019 and 2% in 2020. Factory orders were released from the US on Monday and showed an improvement.
Later today there is the release of US Consumer Price Index along with the latest Federal Reserve minutes, both of which could well impact the value of the USD today. Tomorrow, production price index figures are released and on Friday importantly import and export figures which will be keenly watched as the US-China Trade talks continue.
US-China trade talks delayed but with progress
The US-China trade deal is now not expected to be finalised until May however their most recent meeting on Friday was suggested to have gone well between Washington and Beijing. It will however remain a large driver for the value of the USD and should be continually monitored for developments if you do have a requirements for the USD or any currency pegged to the USD.
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