Last week the US released key retail figures which showed positive growth, today we have the release of Consumer price index data. Expectations are for the Dollar to gain if the data follows suit on Friday's retail figures. During yesterdays trading day swings of 0.57% were noted for GBPUSD exchange rates.
The Presidential election campaigns are gaining momentum. Trump has recently been involved in a spat with new London mayor, Sadiq Khan who had condemned Trump’s comments regarding Muslims. Trump’s response was to challenge him to an IQ test which I think did little to boost his credibility. Cameron also stood by his comments against Trump’s proposed ban on Muslims entering the UK.
Trump recently stated the UK were not to be put at the back of the line in trade negotiations should Britain leave the EU. Cameron said he will work with whoever is elected putting aside what seems to be bad blood between the two. Trump’s comments that are seemingly pro-Brexit did not have the same impact as Obama and we saw little movement on the exchange.
Political uncertainty historically weakens the currency in question, however I do not think we will see this have an impact until much closer to election day. I also feel despite the Federal Reserve indicating there could be a further two interest rate hikes I think we will be lucky to see one which I would expect to see after the election is concluded.
Today at 12.30 we will see the release of Consumer Price Index (CPI) data. CPI is a measure of inflation and is a barometer as to the health of an economy. I expect to see an increase and thus the Dollar to gain value. Tomorrow is the Federal Open Market Committee (FOMC) meeting. The FOMC take a look at current economic conditions and determine an appropriate stance for the present and the future. As I mentioned earlier I think there is too much global economic uncertainty for two rate hikes this year, however I would not expect the FOMC to admit this. I expect a bullish tone and we could see further Dollar strength.
The US economic data appears to be improving and USD could see further strength in the near future. Now could be a good time to get in touch if you have USD buying requirements. Email me here to discuss your options further.
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