Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just 30 days affecting Pound Sterling rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
In recent weeks the commentary coming from the US is that the tax reforms Donald Trump has proposed would be put in place in the months to come. This arguably is one of the reasons why the US dollar has been making inroads against sterling and most of the major currencies lately. However news broke yesterday that the reform bills have hit a stumbling block and won’t be passed in their current state. The Republican party are divided, therefore changes will need to be made before it can be passed to the Senate. With Mr Trump adamant and not prepared to give up any of the changes, I expect this story could put pressure on the Greenback in the weeks to come.
For clients that are selling US dollars to buy sterling, GBPUSD exchange rates have dropped 5 cents in the last 3 months. To put this into monetary value a $200,000 conversion today compared to 3 months ago will generate an additional £5,698. If you are looking to buy sterling with US dollars this month making the conversion sooner rather than later seems sensible.
Regular readers will be aware that a central bank's interest rate has a major impact on exchange rates. When a central bank changes monetary policy by hiking or cutting interest rates, we tend to see major fluctuations for that currency.
For months forecasters have been predicting that the Federal Reserve will raise interest rates in December. Personally I believe most of the factors that warrant a rate hike are aligning and therefore a hike is likely. GDP numbers have increased, consumer confidence is at a 10 year high and the amount of jobs created last month was close to 300,000.
However inflation remains below the Federal Reserve target and this could be a reason to hold off until early next year. If the central bank towards the end of this month or early next month hint towards a hike, expect the US dollar to strengthen.
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