Buying USD has been getting more expensive over the last few trading sessions as a result of USD strength rather than GBP weakness. Last week GBPUSD rates reached a 8-month high following suggestions of progress with the Brexit talks in the UK. This drop in the last few days is the equivalent of 1.5% or nearly $4,000 on a £200,000 transfer. Saying that however the current levels still remain attractive for most with a USD exposure as even with this recent contraction, levels are still up over 3% or $8,000 when compared to only 2 weeks ago.
|Currency Pair||% Change in 1 month||Difference on £200,000|
It was confirmed recently that US President Trump has now postponed an increase in tariffs on Chinese imports as trade negotiations between them have been moving forward. This has given the USD some strength making it more expensive to buy as the trade disputes between the largest two countries in the world defuse. The Wall Street Journal on Sunday suggested that the two sides are close to the final stages which if confirmed would probably result in further USD strength, so something to be very aware of if you have exposure to the USD going forward. There is even talks that the two leaders could meet later this month to end the year-long trade war between the two countries. March 27th has been the date suggested at this stage, a date for the diary for people with any USD exposure.
Over recent times data from the US has been showing a slow-down. US GDP growth slowed to 2.6% annualised in the last quarter of 2018 and the US FED suggested that US inflation will fall even further below the FED's 2% goal this year. These are worrying signs for the US, saying that however it is still growing at a much faster pace than in the UK which is why many expect the cost to buy the USD to continue to remain high.
As we start the next monthly cycle of economic data there is a number of key reports coming from the US this week. Later today we have Manufacturing PMI data, and housing data. Tomorrow is factory orders, trade balance and mortgage data. Friday, we have the largest economic data release of the month with overall jobless data and nonfarm payroll.
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