This US Dollar report will address the factors that are likely to affect rates in the short term if you are looking to make a currency transfer. The below table displays the difference you would have achieved when buying £200,000 over the last 30 days.

Currency Pair% ChangeDifference on £200,000
GBP/USD1.9%$5,000

Flow of money in to the Eurozone weakens USD

Similarly to the Euro, The USD has made gains against Sterling since the Conservative lead over Labour in the polls has begun to diminish. We would have expected to see this trend for the Dollar continue yesterday after some strong economic data releases, but we actually saw the Dollar lose ground against the Pound. The reason for this Dollar weakness could be linked to the fact that we also saw the Dollar take heavy losses against the Euro, with a flow of money out of the US and in to the single currency. There were reports in Europe yesterday, in slight contradiction to Draghi’s speech on Monday, that confidence amongst ECB policy makers is growing and that they feel that they will not need to add to their current monetary stimulus measures, especially now that the French election is no longer a risk to the Eurozone.

Despite the Dollar falling, the data showed that the economy in the US is showing signs of improvement. Consumer spending rose at the fastest levels in four months for April and inflation also showed an improvement month on month. The next US Federal Reserve meeting is in June and with inflation rising and economic data on the whole improving, the chances of an interest rate hike from the Fed become more likely and therefore we could see the Dollar strengthen.

How could data this week affect USD rates?

Anyone with a Dollar requirement should keep an eye on the Fed’s Beige Book this evening at 19:00. This often has the potential to impact USD exchange rates as it gives an overview of how the US economy is performing and can provides hints towards monetary policy going forward. With the economy beginning to show signs of improving, we could expect to see some USD gains this evening. Friday could also be an influential day with a host of economic releases including unemployment rates and average earnings.

These are particularly noteworthy as they have been linked to the timing of an interest rate hike in the future as well as improvements in inflation. If there is a rise in hourly earnings and a drop in unemployment this could increase the likelihood of an interest rate hike in the coming months and could therefore strengthen the Dollar further.

Thank you for reading my forecast, if you have any questions about Dollar exchange rates I would be more than happy to discuss them – you can contact me with any queries here.

The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.