The US dollar has continued its impressive run of form this week, being one of the best performing currencies and benefitting from political and economic concerns around the world. The US dollar has strengthened against sterling by 4 and a half cents, and the euro by 3 cents in the last 2 weeks alone. To put this into monetary terms, a $200,000 transfer into GBP today now achieves over £6,500 more, compared to just two weeks ago.
|Currency Pair||% Change in 1 month||Difference on £200,000|
The US dollar’s gains against the pound during yesterday’s trading were partly attributed to sterling weakness, as markets became cautious of a potential UK General Election looming, causing investors to move their funds out of the pound and into safer haven currencies such as the US dollar. Similarly, EUR/USD rates fell due to disappointing Eurozone Growth figures released yesterday.
However, the US economy remains one of the strongest in the world and yesterday’s Consumer Confidence figures released by The Conference Board, which rose to the highest level in 18 years in October, only helps to confirm this.
In an interview with Fox News yesterday, Donald Trump helped to alleviate some of the concerns regarding the trade war with China by saying “I can make a deal right now, I just say they’re not ready. I think we’ll make a great deal with China, and it has to be great”. There are suggestions of a meeting between Trump and Chinese President Xi Jinping being scheduled for next month. If a deal is reached at this meeting, ending the trade war which has caused concern globally for months, I would expect the US dollar to rally.
We could see the US dollar weaken against its currency counterparts later today as Employment change figures for October are released at 12.15pm.
Expectation is for a fall in the number of employed people in the US. This is followed by Chicago Purchasing Managers Index which is also expected to fall from 60.4 to 60.0.
Thursday brings a host of economic data releases which could impact GBP/USD exchange rates. The Bank of England will announce its latest Interest Rate decision, and although no change is expected, the minutes released afterwards and BOE Governor Mark Carney’s speech could give hints to future monetary policy changes for the UK. This is all followed by Continuing and Initial Jobless Claims, Nonfarm Productivity for Q3 and Manufacturing Purchasing Managers Index all released throughout the afternoon for the US. With so many opportunities for volatility on GBP/USD rates, clients with an upcoming requirement could benefit from getting in touch ahead of these releases so that we can help you to take advantage of any spikes in your favour.
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