With GBPUSD rates on the edge of the 1.30s again how will the next few days unravel as we draw closer to the EU referendum?

Will the Fed hike rates this week?

The Pound hit a 3½ month low against the USD on Monday’s trading due to the chances of a Brexit becoming more likely in recent polls and bookmakers shortening their odds for Britain to leave the EU in next Thursday’s vote.

Although I believe the referendum will continue to dominate the headlines for the next week and a half, I believe that investors will be keeping a very close eye on tomorrow evening’s Federal Reserve Bank Interest Rate decision and monetary policy statement to follow. At the beginning of the year it was anticipated that we would likely see an interest rate hike by June, but in a speech at the end of May, Fed Chairlady Janet Yellen urged caution and hinted that it was unlikely we would see a rate hike anytime soon, which may harm the Dollar’s long-term strength.

With the referendum on-going and the US General election beginning to gather pace, I think it is unlikely that we will see a rate hike this week, but it will be interesting to see if there are any hints towards future monetary policy. The Fed have the chance to raise rates this year in July, September, November and December but I don’t think that it will be until December before we see any policy change.

US Presidential Election Update

It is looking likely that Hilary Clinton will now face Donald Trump as the two set to battle it out for the White House between now and November. After the horrific shootings in Orlando over the weekend, many have been angered at the way Donald Trump looks to have used the tragic events to strengthen his campaign, calling for a ban on some Muslims entering the country. In a speech yesterday, Trump said that he would suspend immigration from countries “where there is a proven history of terrorism” against the United States. It will be interesting to see how his comments split opinion over the coming days, with an early Reuters report suggesting that 42% of Americans agreed with his stance. There has been minimal direct impact on the Dollar yet, but as we draw closer to November these types of comments may have the propensity to affect the Dollar’s value.

How is the upcoming EU referendum affecting your currency transfer requirements? We would love to hear from you. Call us on 01494 725 353 or email rjh@currencies.co.uk.


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