The US Dollar has managed to gain against the Pound since the beginning of this week, despite the potential trade war looming following the implementation of trade tariffs between the US and China. The table below shows the difference in USD you could have achieved when buying £200,000.00 at the high and low points during the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBPUSD1.5%$4,200 USD

9-year high US trade deficit intensifies potential fallout from Friction with China

At a time when the US’ trade relationships are being heavily scrutinised by the financial markets as tensions with China begin to rise, it was surprising to see the Dollar hold its ground against the Pound during yesterday’s trading, despite posting its 6th consecutive rise in its Trade deficit to hit near 9-year highs of $57.9 Billion.

In fact, the greenback continued its gradual rise against the pound since the start of the week, with Cable dropping to 1.39 for the first time since Mid -March.

The dollar did fall by 0.5% against the Euro however which suggests to me that maybe the markets have taken note but couldn’t quite back the pound as poor services data UK side sapped investor confidence short term.  Something certainly worth remembering if you are looking to sell US dollars, as the potential damage of the US’s growing international debt might begin to dissuade investor confidence, making it less valuable long term.

Will today’s employment data make the dollar cheaper to buy?

For those looking to buy dollars with Pounds, this afternoon’s key non-farm payroll release, a favourite for the markets and indeed the Federal reserve when tracking the strength of the US labour market, will likely be taking centre stage.

With so many external variables to impact the stability of the US economy at present, the Federal Reserve will be looking for internal reassurance if it is to maintain it’s positive tone for multiple interest rate hikes this year.

Given the US has been functioning at near full employment, the labour market has been an area investors have been banking on confidently and as such I expect a positive reading this afternoon in the form of Non-farm payrolls to be factored in to current rates already. Thus, if we see a fall in new jobs created there could certainly be more scope for the dollar being cheaper to buy by the end of the day.

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.