Strong consumer spending, low unemployment and an increase in the average wage is moving the US economy from strength to strength and shows no signs of slowing despite the US being involved in trade wars on several fronts. The USD report below looks into the current economic climate of the Dollar and the reasons for its strength. The table below shows the difference in the potential Dollar return when selling £200,000.00 at the high and low points on Friday of last week.

Currency Pair% ChangeDifference on £200,000
GBPUSD0.51%$1340

President of the Federal Reserve Bank of Kansas City, Esther George spoke recently at Agricultural symposium and said “The economy is firing on all cylinders.”

She also stated that GDP was increasing at a solid pace accelerating from a moderate 2% annual rate in the first quarter to an expected growth rate of 4% in the second.

She continued her positivity “Wage gains along with ongoing increases in employment will continue to support increases in personal income and spending over the remainder of the year and on into next year.”

She was questioned about the consequences of the trade wars on the US economy and said the following.“To date, the impact of new tariffs on the broad economy has been minimal, and I have not incorporated any significant effect into my baseline outlook for the broader U.S. economy,” George says. “However, anecdotal reports from our business contacts suggest that some companies are taking a ‘wait and see’ approach to new capital spending due to uncertainty about future trade policies.”
Potential for a busy end to the week for USD exchange rates

Personally, I feel Sterling has little chance against the US Dollar at present. Brexit uncertainty continues to weigh down the pound and investors are moving to the US Dollar as a safe haven which is boosting Dollar value.

It is understandable, 10yr Treasury Bonds are currently at a four year high and the US interest rate outlook is impressive.

I am surprised the 1.30 resistance point is still holding up. CPI Data has the potential to create volatility.

Consumer Price Index (CPI) data is due out on Friday and is a measure of inflation. It is expected to remain above the Federal Reserve’s target of 2% and come in at 2.3%. If the data arrive away from estimations expect movement on the exchange.

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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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.