Gaining the best exchange rate can be helped with a better understanding of what is impacting exchange rates, especially during the volatile period surrounding the EU Referendum and in the run up to the US election and the US interest rate decision.

GBP/USD exchange rates spiked aggressively during yesterday’s trading, in line with the other major currency pairs. The Pound gained almost 3 cents, which was the biggest single-day rise against the US Dollar this year. This has thrown investors and the markets into disarray, with forecasting becoming increasingly difficult under the current market conditions.

Will the FED raise interest rates this year?

On the one hand you have the US economy performing better than that of its UK counterpart but the markets have been waiting for confirmation that the US FED would raise interest rates again, in line with their commitment towards the end of last year. Due to a number of factors, including shrinking growth forecasts and of course the on-going uncertainty surrounding a prospective Brexit, they have had to delay a second rate hike. This has caused investors to lose confidence in the FED and this has been reflected in the recent downturn of the USD.

US elections could cause the Greenback to slide

Personally I am of the opinion that interest rate hike is now unlikely before the end of 2016. However, if the UK vote to remain in the EU this Thursday, we will see an increase in investor risk appetite. This could lead to the FED re-evaluating its position and then they may consider their position next month. The chances are though that with a US election later this year they are likely to hold fire, until they know who is going be leading the country forward and the policies associated with that particular candidate. Therefore if the UK do remain part of the EU then we could well see the Pound gain value later this year and a move back to 1.50 is on the cards.

It’s during these volatile periods when a personal currency broker can help you maximise your trade, by keeping you posted with key market movements and developments. We can help you time your transfer and be your eyes and ears, in what has become an increasingly volatile marketplace.

If you would like further information or you are looking to transfer money abroad please feel free to email me directly at mtv@currencies.co.uk. Alternatively you can speak with any of our currency brokers by calling 0044 1494 725353.

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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.