Yesterday evening the Federal Reserve in America announced their latest decision to keep the interest rate on hold at 1.75% however in the accompanying statement upgraded their wording from a “solid” economy in June to a “strong” economy through July. The USD report below discusses the impact of the speech delievered by the Fed yesterday. The table below shows the range of GPUSD exchange rates over the past month, highlighting the importance of timing your transfer in order to maximise your return.

Currency Pair% ChangeDifference on £200,000
GBPUSD2.96%$7680

The accompanying statement set the tone that almost guarantees a rate hike in September, which would see the rate move to 2.00%.

The main debate taking place at the FED the past week is when will the interest rate hiking cycle will come to an end, essentially identifying at what point the interest rate will be at the correct level for the economy. US Data for the latest quarter was very positive with Donald Trump taking considerable credit for his policies achieving a boost to the economy.  

Trump however raised his concerns in the last week that the US Dollar is continuing to strengthen, which could make US products more expensive and therefore less desirable. It looks as though the FED are going to ignore his thoughts and carry on down a path that will see the US Dollar likely gain further value.

The decision last night did very little to make any changes to the GBP/USD rate which remains around the 1.31 level.
Dollar to take advantage of further EU and UK distraction

Average Earnings and Non-Farms

Tomorrow the biggest release of the month will come in the form of Non-Farm Payrolls; this is all the new jobs created for the month of July outside the agricultural sector. There is forecast to be a slight fall from the previous month however around another 200,000 jobs are believed to have been created.

In theory permitting no major shocks, the markets are once again expecting fairly good news. Accompanying the Non-Farms data will be Average Hourly Earnings which is expected to remain the same as June at 2.7%.

It is probably not surprising to hear but data in the US is likely to keep on coming, suggesting the US Dollar could keep continuing to strengthen. It was nearly exactly a year ago that the GBP/USD rate had a substantial spell below the 1.30 level and under the current circumstances it looks as though the rates headed that way.

If you do have an upcoming requirement to purchase US Dollars, it may not belong before you’re trading well into the 1.20’s so contact your broker discuss your best options moving forwards.

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.