GBPUSD rates have continued to fall over the last 14 days in nearly a straight line. With the combination of both stronger US economic data and poor information from the UK, rates have now fallen by nearly 6% over the last fortnight resulting in a £200,000 transfer securing you nearly $16,000 less. The table below shows the market movements for the GBPUSD rate in the last month:
|Currency Pair||% Change||Difference on £200,000|
A great example of the stark difference between the UK and US at the moment is GDP figures.
GDP figures for the US came out lower than expected recently, growing by 2.3% in the first quarter of 2018 down from 2.9% the previous quarter. This however is something of a dream for the UK which grew by only 0.1% over the same period.
External factors like US bonds have also added fuel to the fire. US bonds, especially 10-year Treasury bonds, have risen above 3% for the first time in more than four years. This has driven more money into the USD pushing up its value.
Overnight we had the latest update from the FED which continued to add fuel to further interest rate hikes. There was no suggestion that it would happen sooner but they certainly left many expecting a rate later this year. Personally I see far more risk than opportunity for GBPUSD buyers and generally would see any pick up in value as a short term opportunity rather than a long term trend.
The First Friday of the month means jobless data for the US. Unemployment in the US is a key indicator for future interest rate change in the world’s largest economy so this release is seen as one of the most important monthly events globally.
Jobless claims are released this morning and expected to show no real change with Average Earnings and Nonfarm Payroll tomorrow afternoon.
The US is currently running at ‘full employment’ meaning that most expect this release to further strengthen the USD making it more expensive to buy. USD buyers may be wise to move before this release in a hope of avoiding further costs.
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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