The Chair of the Federal Reserve Jerome Powell has said that the consensus at the Federal Reserve is that the best policy for the Central Bank is to gradually hike interest rates in the world’s strongest economy. The USD report below discusses the mixed reaction these comments received and the impact this could have on Dollar exchange rates in the short term, we've shown in the table below the range of exchange rates throughout the past 30 days when selling £200,000.00, and your potential return depending on the time of your transfer.

Currency Pair% ChangeDifference on £200,000
GBPUSD4.1%$10,600

The comments were made at a recent economic conference held at the latest Jackson Hole symposium. He then went on to say that ‘the Fed will do whatever it takes’ in the event of a crisis. With the Central Bank having raised interest rates already twice this year the next expectation is for the next interest rate hike to occur next month.

The comments were met with mixed opinions with some analysts believing that the bank should act quicker in terms of raising interest rates as US unemployment is close to record lows. However, the other argument is that too many hikes too soon could cause a problem for US inflation levels ahead.

Powell went on to say that ‘when you are uncertain about the effects of your actions, you should move conservatively...in other words, when unsure about the potency of a medicine, start with a somewhat smaller dose.’

The comments have led to the Dollar weakening against both the Pound and the Euro after having fallen to the 1.26 levels earlier this month against the Pound.

Will the US Dollar continue to weaken against the Pound?

Will the US Dollar continue to weaken against the Pound?

Having fallen at the end of last week I think we could see the Dollar stage a fight back against the Pound during the course of this week. On Wednesday the latest set of US GDP data is published at 130pm with the expectation for annualized growth of 4%, which could provide the Fed with further support in favour of a rate hike at next month’s meeting.

Fed Chair Powell was clearly offering a rather cautious tone at the summit last week but with growth so strong this is a huge justification to raise interest rates again, which would surely improve the value of the US Dollar if the data comes out as expected.

Therefore, if you’re considering buying US Dollars it may be worth doing this early in the week before this set of data is announced.

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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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.