This US Dollar market report discusses the continuing impact of the Brexit vote on GBP/USD exchange rates, whilst also looking at what is happening with US interest rates and the US election.
GBPUSD exchange rates fell to their lowest level to buy Dollars in over 30 years following the Brexit result. As the US is clearly not part of the EU the fall between GBP and USD compared to GBPEUR rates was exacerbated. The price of gold has shot up as global risks to the economy have caused investors to seek the safe haven of the commodity.
A Brexit vote does now mean with increased risks to the economy that a US interest rate hike is now much more unlikely to occur during 2016 but for the time being I think we could see further Dollar strength. One of the predicted biggest risks to the future of the global economy however is Donald Trump and with current polls between himself and Clinton looking very close we could be in for a difficult future ahead.
I think for the time being that we will see the Dollar remain strong against Sterling and possibly see further gains, but as we head towards the election campaign in the US I think we‘ll see the Dollar weaken again against the Pound. Therefore, if you’re thinking about selling Dollar it may be worth taking advantage of these current levels against the Pound.
The bad news for the British economy could get worse as with Sterling falling against the US Dollar as we import so much into this country this will result in higher costs for anyone importing which is likely to be passed on to the consumer. A higher price will impact inflation and retail sales and unless the Dollar weakens the impact of the US exchange rate to the British economy could cause further problems. In fact the AA have already claimed that the cost of a litre of fuel is likely to rise by at least 3%.
If you have any questions about anything you have read in this report, or would like to know more about the impact of the Brexit vote, you can contact me directly with any queries at firstname.lastname@example.org.
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