The US dollar has continued its strength against all major currencies as the trade war intensifies, with the interbank rate of 1.27 being a new key upper resistance level for GBP/USD. However, Chinese officials have held a special press conference over the weekend, publishing a paper that details their approach on trade. The message is clear, defiance and resilience.
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The world's second-largest economy said that trade wars have "not made America great", hitting back at Trump's elections slogan. Beijing also says that unreasonable US demands have led to the collapse in talks. They say that when the US offers an inch, they take a yard. China is showing no signs of backing down, to try and beat Trump at his own game.
The Federal Reserve Bank (FED) chair Jerome Powell is making a speech this evening to give further insight to the impact the trade wars are having on the future of the economy. There have been predictions that the FED are going to cut interest rates twice this year.
In the US, GDP growth met expectations but the weak inflation component triggered concerns about future growth. China is preparing to limit exports of rare earth materials as the US is growing skeptical of striking a deal. President Donald Trump reopened the North American front by threatening to slap tariffs on Mexico as a punishment for allowing migrants to flow past the border weighing on the global mood as well.
This week features a lot of data that could influences the markets and give an indication of the impact the trade wars are having. The ISM Manufacturing PMI provide an updated picture of that sector which is projected to reflect healthy growth however the figures came under expectations.
Friday's Non-Farm Payrolls report for May is set to be volatile. The official government numbers carry the same expectations as ADP's: an increase of around 190K jobs. Wages are forecast to rise by 0.3% on a monthly basis, faster than in April, but are predicted to remain stable at 3.2% on a yearly basis.
Declines are attributable to the Pound falling on heightened Brexit concerns, as the Conservative Party seeks to choose a new leader who likely to be a Brexiteer, increasing the probability of a ‘no deal’ Brexit. pound remains heavy on Brexit concerns, with downbeat UK Manufacturing PMI data May 49.4 from the expected 52.0 adding to negative signals. Growing fears about a no-deal Brexit may be reflected in the PMIs and Trump's relentless trade wars indicate further drops down the line. If you have a US dollar requirement do not hesitate to get in touch with your account manager to discuss ahead of developments this week.
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