The ongoing global trade wars initially sparked by Donald Trump have escalated further yesterday after US motorcycle company Harley Davidson announced that it would move the production of its motorcycles out of the US. This is due to the steel and aluminium tariffs imposed by the EU (in retaliation to the US’s) which has meant that it would cost the company an additional $90-100million per year to ship to the EU, after the 25% import duties came into play on 22nd June. This is yet another unintended implication of Trump’s tax laws which were designed to protect the US jobs market. The USD report below discusses the different ways that international trading complications can impact exchange rates. The table below shows the range of exchange rates and the amount in Dollars you could have received when buying £200,000.00 during the high and low points in the past month.
|Currency Pair||% Change||Difference on £200,000|
This evening two of the FOMC voting members, Raphael Bostic and Robert Kaplan, will be speaking from 6pm. As the US economy continues on its positive run, any further signals towards this could provide further USD strength. Wednesday will see the release of Durable Goods orders, followed by more speeches from FED members. On Thursday GDP figures for the first quarter of this year will be released, and are expected to remain the same as the previous reading of 2.2%. If discussions at the EU Summit on Thursday and Friday this week don’t go to plan for the UK, and progress isn’t made regarding securing a favourable deal for Brexit, we could see GBP/USD exchange rates test the 1.30 level once again.
However, even with so much tension building surrounding the global trade wars, the US Dollar continues to go from strength to strength, with GBP/USD exchange rates falling to close to 7 month lows once again yesterday. This is for a number of reasons – firstly because the US Dollar is seen as a safe haven currency for investors, even with the US is right at the heart of the global tensions. Secondly, the returns available to investors holding their funds in US Dollars is much higher than most other currencies, especially since the Federal Reserve decided to raise Interest Rates to 2% in the US this month, with another two hikes now expected this year.
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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