With the currency markets moving every two seconds, it can be vitally important to be aware of what is driving the currencies in or out of your favour. The table below shows the difference in USD you would have achieved when buying £200,000.00 during the past month.

Currency Pair% ChangeDifference on £200,000
Improvement in US economic growth in third quarter

A possible Government shutdown looms

Yesterday morning, President Trump threw a potential spanner in the works of the Government’s budget negotiations and appeared to go against his fellow Republicans. Trump used his Twitter account to voice his opinion on the Children’s Health Insurance Program (CHIP), to bring the Government shutdown over the weekend that much closer. Congress need to pass all of its short-term budgeting by Friday otherwise it will go into a state of ‘shutdown’, when all non-essential Federal agencies are closed. There have only been 18 Federal Government shutdowns in its history. The thought of the Government shutdown has been accredited to the recent bout of Dollar weakness, among a list that seems to be ongoing for the US at present. 

If talks aren’t resolved today I would expect severe losses for the US Dollar across the board.

GBPUSD tests pre-Brexit Referendum levels, will this surge continue?

One of the key drivers for the Dollar’s strength has been the expectations of three further interest rate hikes this year, and as we have seen of late as these expectation fade, so too does the Dollar’s strength.

The prospect of an interest rate hike by the federal reserve is data dependent and with a string of positive data releases this week, including stronger than expected industrial production figures and jobless claims, despite the horrid weather that most parts of the US has experienced in recent times. These data releases have helped to push expectations of three rate hikes back to 55% from 48% and with expectations helped to strengthen the Dollar ever so slightly yesterday. I would largely expect the GBPUSD rate to stay range bound between 1.38 – 1.40 for now. A weak Dollar is actually helping the US economy in terms of imports and foreign investment, something to consider. I personally think that if Brexit talks go well, we could start to break through the hugely psychological barrier of 1.40.

Thank you for reading today’s USD report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. Feel free to e-mail me at lme@currencies.co.uk.


Read more articles
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.