GBPUSD exchange rates hit a 31-year low on the announcement of a Brexit, those looking to purchase Sterling with US Dollars may wish to do so ahead of the US election.
Since the announcement of a ‘Brexit’ the pound has fallen 18 cents against the US Dollar and now exchange rates are fluctuating at a 31 year low. In the coming days a decision will have to made about leadership of the labour party and MPs from the conservative party will start to put their names forward as a candidate for the next Prime Minister. All of the volatility surrounding UK politics I believe will continue to weigh down on the pound and therefore GBPUSD (cable) will fall into the 1.20s.
Looking ahead once the market starts to level out, I believe any client holding onto US dollars to sell into sterling, should trade sooner rather than later. As we enter quarter 3 this year the Presidential election will come into play and with Donald Trump in contention to become the next President this could heavily weigh down on the dollar and cable exchange rates could increase violently. Consequently for US dollar buyers there is an argument rates will improve later in the year.
Wednesday the Board of Governors from the Federal Reserve release their latest stress tests. The test analyses how the banking industry would react to certain situations and this in turn could therefore impact future monetary policy. This data release can provide a volatile period however its very difficult to predict how the Dollar will perform there after.
Next week Non- Farm Payroll and Unemployment numbers are released (Friday 12:30). Last month’s Non-Farm numbers disappointed the US economy as only 38K jobs were created. However I expect to see a major turn around this month and therefore the US dollar to strengthen. As for the unemployment rate I believe this will be a non-event as it will not change.
The Brexit outcome continues to weigh in on GBPUSD exchange rates, the upcoming US election may well see tides turn. Those looking to make a transfer may want to get in touch with us to discuss your options, 01494 725 353.
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