The US Dollar benefitted from a fresh wave of political uncertainty yesterday as turmoil in British politics threatened to undermine Brexit and UK-EU relations. As a safe haven currency the US Dollar will find value in times of uncertainty and the prospect of the fragile Brexit process coming undone saw the Dollar. The USD report below discusses how this political uncertainty impacts the Dollar positively. In the table below, the range of GBP USD exchange rates throughout the past month and the difference in return when selling £200,000.00 during those times is displayed.

Currency Pair% ChangeDifference on £200,000
Non-Farm Payrolls Figures to Take Centre Stage

The greenback was already doing well as we began this week following an improved economic outlook after the all-important NFPR (Non-Farm Payroll) jobs reports on Friday evidenced further strength in the US economy. The US appears on track to raise interest rates further in 2018 with a further two hikes planned bringing the total this year to 4 versus the 3 initially predicted.

The Fed rate is currently 2% which sets itself as a much more attractive currency versus its peers. With the Eurozone interest rate between -0.25 and -0.4 and 18 months away from any possible hike, plus the UK at 0.5% and debating a hike before year-end, the fundamentals which are supporting a stronger US Dollar look set to remain.

GBPUSD Forecast in the wake of Brexit Crisis

Whilst all is generally rosier for the US dollar, you can always rely on one man to grab headlines which might unsettle investor’s nerves. Donald Trump begins his UK tour on Thursday and there is plenty of scope for some comment or tweet to get the market going. Trump has made no secret of his support for Brexit and he could easily pour some comment on an already volatile situation which would hype up tension on GBPUSD.

With GBPUSD struggling yesterday on the political concerns in the UK, the scope for the US dollar to rise further against the pound looks high to me but as the last 24 hours have proved, we can never take too much for granted on the currency markets.

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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.