The FED have kept rates on hold again despite a series of strong economic signals. Low inflation does remain a concern for the US which raises questions as to whether a hike will be on the table any time soon.

US Fed remain bullish but cautious

The US Fed announced that they would keep interest rates on hold at 0.5%, during their policy meeting last night. This was the result the markets were expecting and as such we saw little movement on GBP/USD exchange rates overnight. The Fed cited an improvement in the Labour market as a positive but remain cautious due to continued low inflation levels. The bullish tone of their statement is likely to raise expectations that they may decide to hike rates in December and investors will be looking to Janet Yellen’s next public address in late August for clues as to whether this is in fact likely to happen.

GBPUSD rates have recovered above 1.30 recently and seem to be holding their position above this key threshold. However, the Pound is struggling to gain any traction above 1.32 and I feel Cable rates are likely to remain range-bound between 1.30-1.35 under current market conditions.

Political tensions rise ahead of US election alter this year

The political landscape in the US could be about to drastically change, as recent polls indicate Republican candidate Donald Trump is now neck and neck with his Democratic rival Hilary Clinton. With the latest scandal to hit the headlines indicating Trump is now actively requesting countries like Russia and China to hack into Clinton’s emails, a clear form of espionage, to try and devalue his opponents campaign.

These underhand tactics are only likely to intensify as the election draws closer but there is a growing fear amongst many Democrats, particularly President Obama, that the expected outcome may not be as cut and dry as many think.

This uncertainty could create USD weakness as we head towards Novembers vote, so any clients holding USD should be taking advantage of the huge improvement they’ve seen over the past few months, as we may find that the USD struggles to make any further sustained aggressive impact against GBP.

Thank you for reading my USD currency report, if you have any questions about USD exchange rates I would be more than happy to discuss them – you can contact me with any queries at mtv@currencies.co.uk.

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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.