This US Dollar article discusses the current situation with USD rates and looks at factors that could affect exchange rates this week. The table below shows the difference you would have received when buying £200,000 at the high compared to the low in the last month.
|Currency Pair||% Change||Difference on £200,000|
With the 'correction' seen in the stock markets, which saw two 1,000 point fall days on the Dow Jones in the US, one of the biggest beneficiaries in the currency market has been the USD.
It seems that there also been a significant pick up in business confidence in the US, potentially as a result of the tax breaks that have been brought in under President Trump. For example, US service sector activity grew at its fastest pace in 12 and a half years in January. Longer term there is however the argument with regards to the spending which has also been approved. The US House of Representatives passed a two-year budget to end the recent brief government shutdown.
GBPUSD rates have dropped by nearly 2% this last week giving nearly £3,000 more on a $200,000 trade.
This has significantly raised government spending limits and puts the FED under new pressure. That being that they are tasked to create growth within the US and as part of that brief potentially raise interest rates. Doing so however will dramatically add to the costs to manage the current debt as the interest on that debt would increase as a result. Jobless claims in the US have also fallen unexpectedly to their lowest level in 45 years boosting expectations for further wage growth. The economy is close to "full employment" with just 4.1% unemployment.
This week there are a number of economic data releases which are likely to drive the value of the greenback. Tomorrow US consumer spending is released in the afternoon and this is expected to show an improvement which is likely to add further strength to the USD. On Thursday Production Price Index and Industrial data is due, these are expected to show a correction which could have a negative impact on the USD, with the week ending with Housing data on Friday. Personally I see buying the USD to be at its cheapest on Thursday whereas USD sellers will probably get the better levels on Wednesday or Friday afternoon.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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