Fears over a hard-line Brexit stance from Theresa May later today in her planned Brexit speech have softened the Pounds value this week. Just over a month ago, I touched on how the GBP/USD rate was around the 1.26 mark, and now the pair are closer to 1.16 than this level, so what’s happened since? Other than the negativity surrounding the Pound which was covered earlier in the Sterling section, the US Dollar has gone from strength to strength off the back of the Trump factor, as have US Stock markets.
To add to the positive sentiment US economic data has been bullish, with the likelihood of another interest rate hike from the Fed likely if inflation figures continue to impress as they have done recently. Three of the past four PPI (Producer Price Index) figures have shown a gain and if these inflation figures get closer to the Fed’s target of 2% it’s likely that we’ll see another rate hike in line with the Feds plan, further strengthening the US Dollar.
Despite the US Markets being closed yesterday for a US Bank Holiday (Martin Luther King Day), the greenback still managed to gain a percentage point against the Pound, and I think it could have gained by even more if Trump hadn’t given the interview with the Times over the weekend regarding the special relationship with the UK and US.
Trump made it clear that he thinks the Brexit is good for the UK, and that we’re top of the queue for a trade deal with the US.
I think focusing on his words, and even his twitter timeline is worthwhile for those planning on making a currency exchange involving the US Dollar, as his words have the power to move markets as Toyota shareholders will know all about (he caused the carmakers share price to drop 3% in a matter of moments recently).
His inauguration is this Friday so that’s likely to be a key event, and this Wednesday at 1.30pm there will be Inflation data released in the form of Consumer Price Indexes for both the month and year. This is likely to be the biggest news release of the week in terms of data and slight improvements on the previous figure are expected for both the month and year. Feel free to get in touch if you plan around these events.
Further movements for GBP/USD are to be expected this week, with Theresa Mays Brexit speech today followed by Trumps inauguration on Friday. Those with a US Dollar requirement may benefit from a quick call with their assigned broker. Call today on 01494 725 353 or email me at email@example.com if youd like to talk through a transfer.
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