This report will examine the factors that could affect exchange rates in the coming weeks in order to help you stay informed if you need to make a currency transfer. The table below shows the difference you would have received in USD when buying £200,000 at the high compared to the low over the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
President of the United States of America Donald Trump, took to twitter yesterday morning to outline the friction between the US and Russia. The President tweeted “Our relationship with Russia is at an all and very dangerous low. You can thank Congress, the same people that can’t give us Hcare!”.
Earlier in the week Trump was forced to sign legislation by Congress (important to note, Congress is controlled by his republican party) that targets the Russian energy sector, which prevents cooperation between the US and Russia. In addition, Russia has responded by announcing that they wish to remove 755 US diplomats.
It is quite clear to see that Trump's administration is putting pressure on the Greenback. The Presidents failure to pass his own legislation, being under investigation for ties with Russia and his uncontrollable outbursts, it is no surprise that the most traded currency pair globally, EURUSD has increased 14 cents over the last 4 months. Furthermore in regards to GBPUSD exchange rates we have seen a 9 cent improvement.
It has been reported that a Grand Jury will be used in the Trump-Russia investigation. The media are suggesting this is an aggressive move by Robert Mueller to gather information.
Grand juries are made up by the public and are completely secret, however according to Reuters, the special counsel is examining if Trump’s team encouraged Russians to release material about the Clinton campaign.
For clients that are purchasing US dollars with the pound the spike in the market looks very attractive. Regardless of Donald Trump’s behaviour I expect overtime the Federal Reserve to put this to one side and increase interest rates further. If this does occur in the next quarter, I expect investment to reach the US shores which would lead to US dollar strength.
On the first Friday of every month the US release Non-Farm payroll numbers (number of jobs created in non-agricultural businesses) coupled with Unemployment rate (unemployed workers divided by the total civilian workforce) numbers. For clients that are new to trading todays data releases normally cause the most amount of volatility throughout the month apart from the monthly interest rate decision.
Predicting NonFarm payroll numbers is difficult to say the least, the consensus is for 183k jobs to be created, which is an average figure. If the figure is released close to 183k I don’t expect the data to have a major impact on US exchange rates. As for the Unemployment numbers a decline to 4.3% from 4.4% is expected. If this materialises I expect GBPUSD exchange rates to fall back towards the 1.30 mark.
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