GBPUSD exchange rates have dropped to their lowest level to buy US dollars since late August as the US has continued to post better than expected economic data.
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US Services and Manufacturing data both came out more positively which led to the dollar strengthening against both the pound and the euro.
The dollar has also benefitted from the sell off in Europe, owing to the Italian debt concerns as investors have sought the safe haven of the US dollar. Indeed, global stock markets have all continued to fall during the course of this month, which has caused the dollar to strengthen owing to its safe haven status.
Later today the US will announce their latest set of Initial Jobless Claims figures followed by September’s Trade Balance data. Both have been showing signs of improvement in recent months, so another strong bit of news could see further dollar strength sending GBPUSD rates even lower.
We end the week with US GDP data which is due out on Friday afternoon. The expectation is for 3.3% for the last year. With the US having raised interest rates a total of 9 times since December 2015, and unemployment close to record lows I think we could see another strong showing to end the week.
If the data continues to show positive growth then this will provide the US Federal Reserve with further evidence in support of hiking interest rates once more before the end of the year. I think we’ll see further dollar strength to end the week.
The issue of the Brexit impasse is rumbling on. With Theresa May’s position coming under continued threat, we could see further downward pressure on the rate to buy dollars with sterling.
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