Its becoming less and less likely that the FED will hike rates at all in 2016. Whether this will help GBPUSD exchange rates is yet to be seen.
At the beginning of the year Federal Reserve Chair Lady, Janet Yellen stated there could several rate hikes in 2016. Now sitting in July, none have materialised. This has been caused by several factors. Firstly, political uncertainty. The presidential election is not a foregone conclusion and during times of political uncertainty it is hard to justify a hike in rates. Employment figures have been sporadic, May’s non farm pay-rolls data was shocking and despite improved figures this month fears have not been alleviated. Global economic uncertainty is also causing a stall in any possible hike. I think due to these factors it would not surprise for US interest rates to remain on hold until 2017.
St.Louis Fed President James Bullard has a similar opinion, he stated that only a single rate increase will be needed for the foreseeable future, despite the rebound in US job growth. Bullard is a member of the US central bank’s rate-setting committee, his recent change in stance of monetary policy was due to his prediction that the US has entered a persistent period of low growth and low inflation.
If you are a USD seller, buying Sterling, you are in an incredible position. You are experiencing some of the best levels for selling the greenback in three decades. There is the strong possibility of a rate cut in the UK, if not tomorrow then it will likely occur in August. Your situation could well improve if there is a UK rate cut, but try not to hang on too long for that extra piece of silver as the exchange can be ruthless in such volatile times.
If you have US dollars to sell for Sterling, you may want to make the most of these historic highs. Speak to us today on 01494 725 353.
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