Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just 30 days affecting Pound to US Dollar rates when buying £200,000:

Currency Pair% ChangeDifference on £200,000
US Presidential election battle heats up

Will the US plays its Trump card?

The Pound has made a small fight back against the US Dollar towards the end of 2017 even after the US raised interest rates for the third time in December. The likelihood is that the world’s leading economy will continue its monetary policy of raising interest rates as we go forward in 2018 as well.

Trump has introduced tax reforms to encourage companies to come back to the US in order to support a business focused economy. If we see the US economy continue its path of raising interest rates this year and GDP continues to remain strong I think we could see GBPUSD rates potentially drop below 1.30 on the Interbank levels in the next few months.

Confidence in the US remains very high and close to the highest since 1990.

With a huge amount of money spent on the recent Black Friday promotion combined with Christmas sales the expectation is for a strong start to the year for the US Dollar.

However, one factor that many may not have noticed is that the US Dollar has fallen by as much as 15% against the single currency so things are not going all that well in the US. Indeed, the Euro has experienced its strongest year against the US Dollar in 14 years.

The Pound has struggled to make anywhere close to these gains against the US Dollar highlighting the problems that the UK economy is facing.

Reasons why the Dollar could strengthen further against Sterling

Although Theresa May has been successful in taking things forward with the European Union towards the end of last year there has still been a lot of problems politically for her and the government. The Tories failed to gain a majority having to combine forces with the DUP. With the US showing very positive sings of growth and the UK failing to keep up this could cause the Pound to struggle against the Greenback.

With the UK still struggling with inflation levels and unsure about what to do with interest rates if the US Federal Reserve continue on their path of raising rates this year this is another reason why I think the Pound could fall below 1.30 against the US Dollar.

Expectations for 2018 are that the US will rise to 2.5% this year meanwhile the UK is only expected to grow by 1.5% this year. Therefore if you’re thinking about buying US Dollars it may be worth getting this done in the near future.

We end the week with arguably one of the most important data releases of the month with US Non-Farm Payroll data due out at 13:30. The expectation is for 189,000 so anything different could cause a big movement for GBPUSD exchange rates so make sure you keep your account manager updated with your particular requirements.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.


Read more articles
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.