The US Dollar continues its rally against Pound Sterling due mainly to its safe haven status. Wednesday's FED hike decision could see Janet Yellen hike rates for the first time since December.
The US Dollar ended last week gaining strength against both the Pound and the Euro as manufacturing data came in higher than expected. The biggest news of the week for GBPUSD exchange rates is likely to come on Wednesday when the US Federal Interest Rate Decision is made. With unemployment now extremely low in the US and the claimant count continuing to improve in the world’s leading economy I think they are ready to raise interest rates.
The US stock market is set to post even higher levels as global investors look to invest in the relative safe haven of the US and whilst the turmoil continues in the UK and the Eurozone this is another reason why the US Dollar remains as strong as it is at the moment.
However, with the election campaign now in full swing, the on-going uncertainty of the Brexit and a 31 year high for the Dollar against the Pound if the Fed choose to raise interest rates to me this could start negatively affecting US exports as it will make them noncompetitive if the rate continues to remain too strong. The Federal Reserve will not be holding a press conference and instead will simply issue their statement following the decision.
We end the week for the Dollar news with the announcement of US GDP data for the second quarter. With the release only shortly after the Fed’s announcement on Wednesday this clearly won’t be able to affect the decision made on Wednesday but it will provide further support for an interest rate hike in the US at some point this year.
Therefore, if you’re buying US Dollars and you’re concerned about the impact of both the Fed’s interest rate decision as well as GDP figures then it may be worth organising early in the week.
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