GBPUSD rates have remained under pressure and have generally been falling. The USD report below discusses how recent economic data and the speech from the Fed hinting that there will be a further interest rate hike at their next decision meeting in September, we have shown the range of exchange rates for GBPUSD below during the high and low trading points for the past month.
|Currency Pair||% Change||Difference on £200,000|
Over the last 16 weeks we have only seen 4 weeks where GBPUSD rates have closed the week higher than where it started, leaving 12 weeks when it has ended the week lower than where it started.
The cost of buying USD with the Pound has increased by nearly 10% over the last 4 months and rates now sit very close to the 1.30 level of resistance.
One of the main reasons for this has been the growing contrast in Central Bank policies both sides of the Atlantic. The FED met this week and all but confirmed that a further interest rate hike will come in September for the US. The FED committee noted that "economic activity has been rising at a strong rate," and that inflation is near their 2% target.
In the UK, interest rates did rise yesterday to 0.75%, however most now don’t expect a further climb until well into 2019 whereas the US could well raise rates a further time this year. The interest rate differential between the UK and the US is one of the largest reasons for the fall in GBPUSD value and this is only expected to widen. For example, The US economy grew at an annual rate of 4.1% in Q2 of 2018, its fastest rate since 2014. In the UK over the same period the economy grew by just 0.2%.
Today we have one of the largest economic releases with US Non-Farm Payroll and unemployment figures. These are expected to represent “full employment” in the US. Data is released at 13:30 BST and is expected to show yet a further improvement in the US market with overall unemployment dropping further from 4% to 3.9%.
If confirmed it seems likely that GBPUSD rates will end the week lower than were its trading currently. Further bad news for USD buyers who may wish to trade beforehand.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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