The US Dollar has seen significant gains ahead of this years Presidential election. How will exchange rates react as we approach closer to November?

Dollar supported on better Jobless Claims

The US Dollar received a boost after US jobless claims arrived better than expected. Any improvements in the economy however are unlikely to have a material impact on dollar exchange rates until the US Presidential election is over. It is also unlikely that there will be an interest rate hike from the US before December as September is too close now with no real economic improvement whilst the November meeting will be just one week before the election.

With just two months to go until the vote, this is almost certainly going to be a hugely volatile time for the dollar with so much uncertainty surrounding the outcome. As we approach 8th November the dollar is likely to come under distinct pressure with losses to be expected. The question is when this volatility really starts to take hold and my view is that there may still be some time to wait. Rates for selling dollars remain close to a 31 year high against the pound which has presented an excellent opportunity to sell. The pound however has been rallying over the last few weeks on a brighter UK outlook all things Brexit related so it is difficult to see the dollar strengthening much further beyond these recent highs. The combination of a resilient pound and a highly explosive US election should see GBP USD levels strengthen over the course of the next two months.

1.40 for GBP/USD should be on the horizon before Nov 8th

Data is light in the US today although a speech from Eric Rosengren, President of the Federal Reserve Bank of Boston could give some clues to current interest rate policy. My view remains that politics will soon become the driving force with the Federal Reserve side-lined for the next few months. Next week should be more interesting with retail sales and inflation numbers.

US Dollar sellers may want to make the most of the recent highs against Sterling, the US Presidential elections could reverse some of the highs seen since Brexit. Call us today to find out more on 01494 725 353.


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