This update looks at factors that could affect US Dollar exchange rates in the short term. In the table below you will see the change from high and low for GBP/USD during the high and low points yesterday.
|Currency Pair||% Change||Difference on £200,000|
Yesterday news emerged that Donald Trump could be removing the US from a landmark deal known as the Paris climate agreement, following a tweet in which he said he will be announcing his decision in the next few days, followed by make America great again.
Although this has little direct affect the on the Dollar, the worrying signs are what this means for the President. It shows that the President is willing to go against global leaders, after reports from the German Chancellor Angela Merkel that efforts to persuade Trump from doing so were a waste of time. I think that there are two possible scenarios for the President: He chooses to go against global leaders advise which could in turn start to increase Global risk appetite and potentially strengthen the USD due to it’s a safe haven status, or he chooses to listen to his global peers, sticks to the agreement and loses faith from his followers. Trump has previously vowed to irradiate the Paris Climate Agreement within his first one hundred days of office. This could translate into USD weakness.
Domestically, within the US yesterday the economic data released yesterday was a mixed bag. The Chicago Purchasing Managers Index was a lot better than markets anticipated and points signals that the US economy might soon be thinking about raising interest rates. On the other hand, the housing data released yesterday was less than impressive. The housing market is a key indicator into the health of the US economy and poses a difficult question as to whether the US can afford to raise interest rates yet.
On Friday this week, the all-important Non-Farm Payroll data is released. The expected drop is to 183K from 211K the previous month and could add to the difficult question of raising rates in the US. If the data is worse than predicted, I believe we could see the GBPUSD start to test the 1.28/1.29 barrier due to the prospect of a June rate hike diminishing.
For more information on how future data releases could affect your US Dollar requirement, call our trading floor on 01494 725 353 or email me here.
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