The following report looks at GBPUSD exchange rates, the US Interest rate hike decision and the upcoming EU referendum.
Sterling vs the US Dollar hit a 4-month high earlier this month but have slowly started to fall lower. Although clearly we are in for a very uncertain political period for the next 6 months it appears as though the Federal Reserve could be getting close to raising interest rates next month.
At the moment there is a 30% chance of this happening next month with a 60% chance of it happening in September. Clearly the odds are for later in the year but there is still appetite for a rate hike. The next decision is still a few weeks away on June 15th and I think the Fed are unlikely to do anything in the midst of the Brexit vote.
For the US economy the effects from the UK voting to leave the EU could be small but still noticeable and to hike interest rates before we know the outcome of the result to me appears unlikely. Data has been relatively strong for quite sometime for the world’s leading economy so I think it is a matter of time before the Federal Reserve acts. Domestically the economy is looking good but with the global economy struggling to make headwinds it may be a little too early to do anything in June.
On Wednesday we see the release of Services data for May and on Thursday Initial Jobless Claims are announced. If both data announcements show signs of improvement this could influence the Fed to seriously consider raising interest rates. Therefore, if you need to buy Dollars with Sterling it may be worth organising this earlier in the week.
An Interest rate hike will most likely impact your USD transfer requirements, its advised you speak with one of our knowledgeable brokers ahead of the US Interest rate hike decision in June. Call our trading floor on 01494 725 353 or email me here.
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