With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The below table shows the difference in USD you would have achieved when buying £200,000 over the past month.
|Currency Pair||% Change||Difference on £200,000|
Buying USD with Sterling has now climbed up to a recent high, only a cent away from the best levels seen this calendar year. The reason for this climb has been a perfect storm for GBPUSD traders as we have seen some positive UK data and weak US data. To put this to scale if you are trading £200,000 into USD you are getting over $7,750 more compared to the low in the last month, $15,500 over the last 4 months and a staggering $22,500 since the beginning of the year.
A majority of these gains have come from US weakness, as the delays and lack of confidence in President Trump to deliver on his election pledges has slowed the rate that interest rates have climbed in the US. Generally economic data for the US has been improving stated the FED at their latest meeting Wednesday evening. In this meeting they unanimously declined to raise interest rates this month. I think the focus inside the FED is now on reducing their high balance sheets following their Quantitative Easing program following the financial crash in 2008. They are calling it their ‘balance sheet normalization program’ and it is expected to start in September.
This will be seen as a positive step as it is much faster than the Bank of England’s plans so I expect the USD to gain in value once more.
At this point, as the market dilutes this news and accepts that interest rates will not go up quickly it is presenting GBPUSD traders with potentially a short term opportunity that could evaporate as soon as this afternoon.
Later today the US release their most up to date GDP figures and this is expected to show an improvement annually, in a similar way that most data releases from the US are currently. As a result I for one expect buying the USD to get more expensive this afternoon, buyers may well want to move before this release at 13:30, whereas sellers may well wish to wait for the hope of an improvement towards the end of the day.
Thank you for reading today’s US Dollar report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. I am more than happy to assist you with any of your currency requirements. Feel free to e-mail me here.
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