The odds of an Interest rate hike in June were increased to 60% on Monday, however, US data continues to be mixed and global uncertainties are still a concern. You can view exchange rates at any time by viewing our live exchange rates page.

US Fed looking unlikely to raise Interest Rates at their next opportunity

Whilst the EU Referendum continues to be the main driver of Sterling exchange rates, it’s the anticipated Interest Rate hikes that dominate the narrative surrounding the health of the US economy and therefore, US Dollar strength.

Clients of ours with an upcoming currency requirement involving the Greenback should be aware of the potential knock on effects of an Interest Rate hike, and also the effects even talk of the hike can have on the Dollar’s value.

After increasing the rate in December and outlining a planned 4 further hikes throughout 2016, the Fed Reserve Bank has been tentative to make further upward increments due to economic conditions in the US, and the planned 4 hikes, which has since been dropped to 2, is now looking unlikely. For this reason I expect the Pound to continue to gain on the Dollar, as investors remain bearish regarding the US economy. The remaining opportunities for the Fed to make changes are the 15th of June, and then there will be decisions made in July, September, November and December.

Non-Farm Payrolls to take centre stage next week

Later today US GDP Figures will be released at 1.30pm, no major changes are expected but expect movement should the figures come out a sizable distance from their expectations. Fed Chairlady Janet Yellen will be giving a speech from 3.30pm onwards, her tone has been bearish lately so any changes could result in US Dollar strength.

Next week on Friday both Non-Farm Payroll and Unemployment figures are set for release and expect them to dominate the market commentary on the likes of Bloomberg and CNBC. Both have the potential to significantly move the markets so clients hoping to avoid volatility may wish to make their conversions prior to Friday.

Thank you for reading todays US market report, the FED are expecting a hike this year and any sign of one will likely equate to a stronger Dollar. Get in touch with our brokers to find out when the likelihood of a hike will be so you can plan your requirements around it. Call our trading floor on 01494 725 353 or email me here for more information.


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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.