The Greenback posted further gains against sterling yesterday, as the dollar continues its impressive run of form this week. As we start the trading day this morning, so far the dollar has climbed nearly 2 cents this week from 1.3339 to 1.3139, over $4,000 difference on a £200,000 transfer in less than a week – highlighting just how volatile the markets are at present and the importance of using a broker on your international transfers.
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The US economy has been a hot topic of late and whilst many analysts are predicting a slowdown stateside, yesterday’s service sector figures showed the opposite. New orders were the main reason for the three months jump as the figure rose from 56.7 to 59.7 in February.
The February employment report is released on Friday, which includes the eagerly anticipated Non-Farm Payroll numbers, unemployment data and wage growth data. The forecast is set for a drop to 180,000 new jobs, along with 3.9% wage growth.
Many feel as though economic data and the subsequent move of the Federal Reserve are key to the Dollar’s strength or weakness this year and this report will be keenly watched to see if the Federal Reserve’s motion for patience on interest rates is warranted.
Later on today we will see the Federal Reserve’s Beige book which is a summary of the latest economic conditions in the US. Jerome Powell, the Chairman of the Federal Reserve has been vocal with regards to his “wait and watch” attitude before announcing any changes going forwards and I suspect this release will back up those claims.
In my opinion, I would largely expect the dollar to continue to strengthen as we end the week, as investors on the GBP’s side will start to hedge positions as we move closer to the all-important 12th March vote in the UK, I could see GBP weakness and a possible move towards 1.30 if all goes well in the labour report on Friday.