Last week was the strongest the USD has experienced since 2016 with the index gaining 1.6% despite the government reporting slower 1st quarter growth figures, but this could still be a platform for the greenback to further build on with some very important data releases coming this week on Monday, Wednesday and Friday. The table below shows the GBP/USD change for the last week:
|Currency Pair||% Change||Difference on £200,000|
Monday’s Personal Consumption Expenditure (PCE) index, a key indicator of inflation and preferred by the Federal Reserve, is expected to increase by as much as 0.2% which indicates further bullish interest for the USD.
Wednesday’s FED monetary policy statement and decision surrounding interest rates is definitely one to watch as this is also off the back of last Fridays announcement that US businesses have raised employee pay at its fastest rate in 11 years, although it’s worth bearing in mind where the economy was at that time with recession affecting the global economic climate.
The increased wages and the resulting effect on business expenditure poses risks of inflation, which would suggest an increase in interest rates could be on the cards.
An interest rate hike would be in line with FED chief Jerome Powell’s indications earlier in the year that “rates could be raised by as much as 0.25% a further two or three times in 2018”, despite already raising them 6 times in the last 3 years.
Fridays collection of employment data is also expected to produce strong figures and keep the forward momentum in the US economy.
Depending on the outcome of the data released this week, in addition to easing political tensions, as seen at the end of last week with the historic meeting between the North and South Korean presidents which has taken attention away from trade wars between the east and west, I personally see another strong week for the Dollar and any prospective buyers or sellers should watch with interest.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353.
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