Yesterday, the US dollar rate clawed back 0.5% against sterling as the US released a flurry of data releases, which prompted investors to purchase the US dollar. Durable goods orders data for September was released at 0.8% and forecasters were predicting -0.9%. In addition new home sales which had been on the decline in recent months was released at 0.5% and again forecasters were expecting a much worse figure of -0.1%.
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With the economic data releases for the US impressing yesterday and the ongoing Brexit negotiations causing problems for sterling, GBPUSD (cable) exchange rates have declined 4½ cents in 2 weeks, creating a great opportunity for clients selling US dollars to buy sterling. As stated in today's sterling report there are many upcoming events with the potential to have a major impact on sterling, however I believe the US dollar has a rough ride ahead.
In recent months, the US dollar has benefited from Donald Trump’s tax cuts and deregulation approach, but forecasters are starting to show concern in regards to the protectionism policy that Donald Trump is putting in place.
The ongoing trade war has led to world growth forecasts being cut and rumours emerging that the FED may have to rethink interest rate hikes in throughout 2019. The longer the trade war goes on, the more pressure there will be on the US dollar.
To finish the week the US are set to release their latest revised GDP numbers. Last month the US economy grew by 4.2%, which was fantastic news for the greenback. However, the annualised figure is expected to show a decline to 3.3% which could put pressure on the dollar. For clients buying US dollars today, waiting to the afternoon may provide the best opportunity.
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