Fed chairman Jerome Powell is keeping the markets guessing with some volatility seen after his first meeting, so tomorrow could see an interesting response. The table below shows the GBP/USD rate movements yesterday:
|Currency Pair||% Change||Difference on £200,000|
The US Fed meet tomorrow for the latest interest rate decision. The markets are largely expecting interest rates to remain on hold at 1.75% after the Fed raised rates by 0.25% at the last meeting under the watch of new Fed Chair Jerome Powell.
US data has largely been positive and there has been a pickup in real wage growth and inflation which certainly lends support to further hikes later this year. This meeting will be more about how the US Fed sees inflation and how concerned it is over the recent rise in prices. The commentary on this is likely to direct the price of the dollar accordingly but as things stand the Fed are expected to raise rates at least twice more this year.
The US dollar has been boosted following revised figures from the International Monetary Fund (IMF) that forecast economic growth to hit 2.7% this year. Growth has been revised higher up from 2.3% only a few months ago on the back of tax policy changes which have now been approved and which is resulting in increased investment from American corporations. The economic outlook for the US economy is looking brighter and this should bode well for the dollar going forward.
US data today sees a host of manufacturing data as well as construction spending. US Nonfarm pay Rolls are released this Friday and should make for an interesting end to the week. The markets are expecting a big number of 198,000 new jobs created in April outside of the agricultural sector and this could help see the dollar rally.
On a side note the US President will be visiting Britain on Friday 13th July where he is expected to meet the Queen. London Mayor Sadiq Khan and Donald Trump have exchanged blows in the past and protests in the UK are to be expected. Whilst the currency markets are not likely to be impacted directly from this trip, from a bystander’s point of view there are likely to be some fireworks when the President is in town.
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