This report will examine the factors that could affect exchange rates this week 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 when buying £200,000 at the high compared to the low for the past month.

Currency Pair% ChangeDifference on £200,000
GBPUSD2.15%$5,500
US Fed Outlook

USD movement in October

The value of USD has been rather changeable of late as the market continues to try and price in the changing impact of the recent hurricanes, the pending interest rate decision, the next potential FED lead and indeed the continual economic releases in the US. Generally GBPUSD rates have trended positively over the last 30 days and rates have climbed by almost 2% meaning a further $5,000 for every £200,000 transferred.

Yesterday Jobless figures and business confidence figures were released which showed improvements – this adds to further speculation of a pending interest rate hike by the end of the year, which is now widely expected. It resulted in the USD becoming more valuable and expensive to buy.

UK raise interest rates and GBPUSD falls

The Bank of England yesterday also raised interest rates but equally suggested that rates will climb at a much slower pace than expected, suggesting that the Brexit result will impact future hikes. This news resulted in GBPUSD rates dropping by almost 2 cents. Buying USD is now towards the most expensive seen in the last 30 days.

Why is the next FED head so important?

Over the last few weeks there has been an increased intensity on who the next lead of the FED will be when Janet Yellen steps down in February next year. The reason simply for this is that each potential successor has their own opinion on the future policies of the bank, meaning if a more hawkish candidate is successful it makes the likelihood of future interest rates more probably and the USD will probably increase in value. Whereas a more dovish leader would potentially weaken the Dollar’s value.

President Donald Trump last night picked Jerome Powell who is now pending Senate confirmation before taking the seat. He is a lawyer by training, a former partner in the world’s largest investment firms and has been on the FED board since 2012.

He has voted with the majority on interest rate hikes and is considered to be more likely to raise them sooner than others – this appointment by the President has strengthened the Dollar as a result making it more expensive to buy.

Today’s GBPUSD expectation

Today we have the US manufacturing PMI, the Baker Oil count and Factory orders. These are generally expected to show a climb and as a result I personally expect the USD to be more expensive to buy at the end of the day.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.