This US Dollar report will address the factors that could have an effect on exchange rates over the coming weeks. The table below looks at the difference between the rate you would have achieved when purchasing £200,000 at the low and high levels on Tuesday.
|Currency Pair||% Change||Difference on £200,000|
We have seen Sterling fall against the US dollar following a significant rise following the Republican Party’s failure to replace former President Obama’s Affordable Health Care act. Sterling hit an 11 month high as investors lost confidence in Trump’s ability to push through legislation and GBP/USD breached the 1.30 resistance point.
Since then however we have had the release of UK inflation data which showed a fall and the pound has weakened as a result. Although I am of the opinion Sterling is undervalued, I am of the opinion short to medium term we could see further falls for the pound against the green back. I just think the uncertainty surrounding Brexit talks will hold back Sterling making any significant gains. If you are buying USD I would be taking advantage of current levels, not holding on in the hope of small gains.
Despite Janet Yellen making everyone aware it was her intention to make as many as four rate hikes this year we have only seen one materialise. I am of the opinion data releases have not been consistent enough to warrant a further hike. The unpredictability of Trump also does not fill the Federal Reserve with confidence when it comes further interest rate hikes.
Tomorrow will see the release of the continuing jobless claims which is a measurement of the number of individuals who are unemployed and are currently receiving unemployment benefits. Initial jobless claims is the number of people claiming unemployment benefits for the first time. These releases present the strength of the labor market. A rise has negative implications for consumer spending which discourages economic growth. I would expect a fall, if it is larger than expected we could see US Dollar strength.
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