The US Dollar has weakened slightly following comments from Janet Yellen - the FEDs Chairlady, who has suggested further hikes will be done at a modest pace.
In line with some very positive economic data over the last few months including yesterday’s US inflation data which came out higher than expected at 2.7% compared to 2.2% this has seen GBP/USD rates continue to move close to the 31 year low seen only a few months ago back in October 2016. We saw GBP/USD rates drop below 1.20 and with last night’s interest rate hike we could see further US Dollar strength against both the Euro and the Pound.
We have seen a brief weakening of the US Dollar owing to the press conference that was held after the decision in which Fed Chairlady Janet Yellen has suggested that a ‘modest increase’ in the rates is appropriate ‘in light of the economy’s solid progress.
As one of the only western economies that is in the process of hiking interest rates the expectation is that more will be coming with predictions of another 2 coming during this year. The impact of the new President Donald Trump does not appear to have had any negative effect on the US economy, which is why we are seeing such a strong Dollar at the moment.
Although Trump’s approval ratings are close to the lowest ever for a US president his ratings amongst Republicans is 86% which is only second to George W Bush over the last 65 years when a Republican has been president.
Trump’s commitment to new job creation, lower taxes and business investment has seen both the US stock market and FTSE 100 hit record levels recently. However, as the most of the companies in the FTSE reflect their profits in US Dollars the GBP/USD rate being as low as it is helps the FTSE.
US Jobless Claims are due to be published later today and combined with positive US non-farm payroll data earlier this month the economy is going from strength to strength which is another reason why the US Dollar is performing so well against both the Pound and the Euro.
Personally I think we could see GBP/USD rates drop below 1.20 in the weeks ahead. Even though there is an uncertain future ahead with Trump the Pound is under pressure politically with next month’s Article 50 issue. Therefore, if you need to buy US Dollars it may be worth organising something in the near future.
If you are looking to buy US Dollars in the near term, you may be prudent to do so sooner rather than later. Speak to one of our specialist today on 01494 725 353 or email me here to get a free quote.
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