This Friday, economic growth figures for the US and the UK are released which are likely to play a part in the decision to raise respective interest rates. In today's US Dollar report we look at the way this could impact the USD; the table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past week.
|Currency Pair||% Change||Difference on £200,000|
US bond yields are now at their highest level since 2008, amidst fresh fears of US monetary policy and the outlook for US inflation.
These fresh fears have been a catalyst for a large influx in investors buying both 10-year bonds in the US and 2-year bonds. With yields offering higher returns for investors, this influx in bonds has helped to push the Dollar’s value higher. If this yield level is supported, I would expect cable rates to remain under pressure in the up and coming weeks.
GBPUSD breaks 1.40 – will is stay under pressure?
Currently, the main driver for GBPUSD weakness is the outlook for the Bank of England Interest rate decision next month. Last month’s disappointing data in the UK meant that decision as to whether or not to raise interest rates became less clear. With Brexit, now back in the UK headlines, I am struggling to see much reason as to why GBPUSD will be back above 1.40 and be there to stay anytime soon.
One thing that could help the pairing retrieve some losses from Sterling’s perspective could be if investors start to pull their money from 10-year and 2-year government bonds. Last night the 10-year bond yield dipped below 3.00%, a consolidation below this figure would likely result in investors removing their investors and cause the Dollar to weaken.
On Friday both the UK and the US will release the latest Gross Domestic Product figures. The US economy has been the main driver behind the speculation of a potential 4 US rate hikes this year. US China trade relations and a slowdown in the US economy has attributed to this speculation to be reduced and has been a factor in recent US dollar weakness, prior to this week.
This Friday the US and the UK will both release their latest economic growth figures and any deviation from what is expected is likely to feed into the prospect of raising interest rates for both economies, a busy day for any clients holding either Sterling or the US Dollar is anticipated.
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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