Due to the continued uncertainty surrounding the US economy, including US trade tariffs and and President Trump's offices being searched as part of the investigation into his potential promiscuity with Stormy Daniels, Sterling has gained in strength against the Dollar. This report considers the factors impacting the Dollar in the medium term. The table below shows the difference in Dollars you could have achieved when buying £200,000.00 during the high and low points of the past month.

Currency Pair% ChangeDifference on £200,000
GBPUSD2.5%$7,150 USD

GBPUSD rates near year high

GBPUSD rates have started to climb once more going up by over 1.8% within the last 7 days. This climb gives GBPUSD clients over $5,000 more on a £200,000 transfer. Rates are now within half a cent from the highest levels seen for over 12 months which really highlights the opportunity for any clients with a USD exposure. Rates are up nearly 5% this year to date and 12% when compared to a year ago. 

Despite growing fears over rising oil prices and global trade the US Dollar continues to perform well against GBP

This gain most recently has come from USD weakness as concerns mount about the US’s economy and leadership. Politically we have a recent change at the top of the US government with the head economy advisor changing for the 4th time in a year. A further investigation potentially on President Trump with lawyer’s office’s being searched, which apparently has resulted in president Trump trying to get the lead investigator sacked from his position.  Economically there are concerns mounting as the trade war with China and others develop further. This is driving concerns about what the short term impact could be and whether a slowdown starts within the USA.

The US China trade war has in turn reduced the probability of interest rates climbing as high in the next 12 months weakening the USD’s value.

Moving forward all of these topics will continue to change the value of the USD. Personally I expect the USD to get cheaper still as I think each of these stories have longer to go. For example with regards to the trade talks with China; China announced tariffs on 106 US products in retaliation to the Trump administration’s threat of import duties. President Trump responded by putting a plan out for a $100bn in import tariffs on Chinese goods. This topic seems to be escalating quickly.

 

Import export figures expected to be poor

Today we have the latest data released from the US on the strength of its import and exports. Most expect this to show a further increase in the trade deficit within the US. With an increased awareness of this topic as trade wars are being talked about most expect this to further weaken the USD when released.  As a result if you are buying USD you may wish to wait until this afternoon’s session once this has been released, if you are a USD seller this week acting sooner rather than later may be wise.

 

Oil risks from the US

On Friday we have the latest oil figures released from the US with the baker Hughes oil rig count.  Currently this stands at 808 which the highest since March 2015. The number is keenly watched as an indicator of future output in the US. Many have expected this figure to climb which would give the US economy a boost and normally therefore the dollar a gain in value. With the China trade concerns and Russian tensions mounting many expect the number of oil rigs to increase so something to continue to watch out for moving forward.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.