Sterling has been up against the dollar since mid-August, but despite this cable rates are currently over 10 cents from the highest points of 2018, which were experienced back in April when levels had exceeded 1.40. The volatility experienced by the pairing this year has been exceptional, with around 16 cents between the highest and lowest points.
|Currency Pair||% Change in 1 month||Difference on £200,000|
In monetary terms, a well-timed transfer at the start of the year when rates were at their highest would have achieved over $30,000 more than it would have at the lowest levels, experienced back in August.
The greenback’s strength over the last 6 months has widely been attributed to the nation’s impressive economic performance. An example of this was shown in last month’s data which identified that the nation’s unemployment had fallen to the lowest in 48 years, at 3.7%.
In addition to this, US President Trump’s bullish approach to trade negotiations with key trade partners, which has thus far been deemed successful, has further encouraged investor sentiment in the greenback and lead to the strength seen with its most traded currency pairings.
This being said, there is an argument to suggest that some of the favourable USD movement has been due to the weakening of the other currencies paired with the dollar. Recent sterling gains are an example of this, as suggestions of a potential exit deal before the end of the year have seen gains of over 2.5% against the USD in the last month alone.
This week, investor attention will be primarily focused on US GDP and Inflation data to be released at the end of the week, as the response to these releases can generally influence market movement.
The previous GDP figure for Q2 showed a percentage change of 4.2% from Q1, which was the highest increase from a previous quarter seen since 2014. The upcoming result is not expected to remain as high, with current indications of 3.3%.
This is still a considerable figure and if the result is in line with expectations, USD could consequently see favourable movement.
The Personal Consumption Expenditure index due to be released on Friday is the preferred indicator of inflation for the FED, and carries similar weight to GDP data in relation to its influence on market movement. Current expectations are for a slight decline from the previous of 0.1%, which could provide an opportunity to gain ground against the USD.
Clients planning to purchase USD can keep up to date with the latest market information by contacting their account manager here at Foreign Currency Direct.
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