As the US Dollar rallies against the Pound, many are left wondering when the FED will hike rates, if at all this year.

Shootings in Dallas likely to overshadow political events

GBP/USD rates remain marooned under 1.30 on the exchange, with this level fast becoming a key benchmark for the pair. The greenback is benefiting from the on-going uncertainty surrounding the UK economy, following our monumental decision to leave the EU. With events overnight in Dallas, where four policemen have been killed, likely to overshadow any political events as we move towards the end of the trading week, many investors will be looking at today’s non-farm payroll figures for further guidance on the relative strength of the US economy.

We also have the latest Unemployment rate, which is expected to increase from 4.7% to 4.8%, which if accurate could help strengthen Sterling’s position back above 1.30.

Will US FED raise interest rates?

There’s been much debate surrounding another prospective interest rate hike by the US FED but up until now they are yet to act. With events in the UK causing global market concern, I am of the option that they we are now unlikely to see an interest rate rise this year. Employment Data has also been weak, along with a wider than expected trade deficit, which grew by 10% in May.

What is clear, is that USD sellers now have a fantastic opportunity to sell their positions at some of the best rates they’ve seen in over 31 years! With the political uncertainty in the US only likely to increase, as we head towards their elections in November, and the likelihood that the Pound will gain some traction as the economic and political uncertainty begins to be removed, any clients holding USD should be looking to protect themselves against a likely downturn over the coming months.

The US Dollar continues its 31-year high against the Pound, but this could change off the back of todays Non-farm payroll figures. Talk to your broker ahead of the major event on 01494 725 353.

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