This USD forecast looks at what might happen to GBPUSD exchange rates in the short term and offers a glimpse at what might happen to exchange rates given the possibility of further US interest rate hikes during 2016.

GBPUSD exchange rate appear to be levelling out

On the 16th December the US raised interest rates and the Dollar went from strength to strength against the Pound. Throughout the end of December and January cable exchange rates plummeted from 1.50 to the lower 1.40s. However, since the latest US interest rate decision two weeks ago where the FED decided to keep rates on hold at 0.5% it appears the market is now starting to level itself out and cable exchange rates have shifted into the higher 1.43s.

In my last report I predicted cable exchange rates would continue to drop throughout 2016 and I continue to support that prediction. It was no surprise the FED decided against raising interest rates twice in a row, as the US would have wanted to assess how the hike had impacted the US economy. As we know the currency markets do not move in straight lines and that’s why we have seen the market level itself out. With the FED indicating hikes will occur gradually and are totally data dependent it wouldn’t surprise me to see positive US data throughout the next couple of months and a further hike before the summer and cable exchange rates plummet into the 1.30s.

US Non-farm payroll and Unemployment rate predictions

With last months Non-Farm payroll numbers exceeding expectation and providing a further boost for USD sellers the figure was always going to be difficult to match a month later. The prediction is for a drop of over 100K jobs created which should provide a window of opportunity for buying USD. As for the Unemployment rate, I expect the number to be released at 5% as previous and due to the no change, the release could be a non-event.

For more news on data releases that could impact your currency exchange call our team of currency brokers on 00 44 1494 725 353 or email me directly at drl@currencies.co.uk.

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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.