Cable rates are currently fluctuating at the lowest levels seen since April 2017, with the mid-market momentarily dropping below 1.25 on Wednesday, following Theresa May’s U-turn decision at the start of the week to delay the meaningful vote on her Brexit deal, due to the anticipation of a landslide defeat.
|Currency Pair||% Change in 1 month||Difference on £200,000|
Since the Spring, GBP has weakened considerably against USD and since mid-August has seen movement of around 7 cents, struggling to exceed 1.32, but bouncing back from an apparent resistance of 1.25.
In monetary terms, the volatility of cable rates has meant that well timed transfers at the better levels in September could have achieved approximately $14,000 more on a transfer of £200,000 than at the lower levels seen recently.
Questions surround whether the Greenback will remain bullish into the new year and put further pressure on the struggling pound, so investors will be paying close attention to how Brexit developments will now play out following UK Prime Minister Teresa May’s majority success in the confidence vote last night and to global trade negotiations involving the US, which has typically been a key influence in USD exchange rate movement.
US president Donald Trump’s hard-line approach to trade negotiation, particularly with its largest trade partner China, has been a key influence and driver of currency’s strength this year.
Last week, US trade representative Robert Lighthizer announced that if a satisfactory solution to current tariffs couldn’t be agreed by the end of a 90-day period beginning December 1st, tariffs on $200 billion worth of Chinese imported products could rise from 10% to 25%.
However, according to the latest suggestions from US officials, China has apparently agreed to reduce import tariffs on U.S cars by 25%, providing optimism for further talks and ultimately easing the bitter trade war between the worlds two largest economies.
Economic data releases can be a key influence on the movement of currency markets, as positive results encourage investor sentiment.
Yesterday’s US consumer price index (CPI) data, a key influence of inflation, saw a slight increase of 0.1% and attention will now turn to the outcome of the employment data released today, in addition to retail sales and manufacturing data tomorrow.
Better than expected results could see the USD strengthen going into the weekend, so clients looking to purchase the currency could benefit by planning around these releases.
For more information, please contact your account manager here or contact our trading floor directly on 01494 725 353.
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