On Wednesday night the Federal Reserve took a forward step and ignored the calls from Donald Trump to keep interest rates on hold and raised U.S interest rates for the fourth time in 2018.

This hike was widely expected and although in general an interest rate hike is seen as positive for a currency, the general tone around has actually lead to the dollar weakening since the release.

Currency Pair% Change in 1 monthDifference on £200,000

Chairman of the Federal Reserve Jerome Powell downgraded growth forecasts for next year and also confirmed that his expectations are now for just two interest rate hikes instead of three, personally I would be surprised to see even two.

If we see GBP/USD exchange rates close today above 1.2579 this will put an end to a six week losing run for the pound against the dollar, had there not been the current Brexit debacle and without the pending Parliamentary vote then I feel that the GBP/USD rate would be comfortably back in the 1.30s, but the political problems in the U.K are holding the pound back at present.

US Businesses are pessimistic about pace of recovery

U.S Economic data out today

We do have important economic data from the U.S today in the form of the latest growth figures and Durable goods orders.

Growth figures are expected to have remained solid along with a slight improvement in Durable goods orders. Durable goods orders are those expected to last more than three years, such as automobiles and electrical appliances. This can be a sign of how an economy is performing as generally these are larger purchases, and consumers don’t tend to make larger purchases when they are pulling their purse strings tight.

The general performance of the U.S economy this year has been strong so I would be surprised to see anything other than a good figure hit the wires today, however in my opinion next year you may start to see the tide turn as mentioned earlier in the report.

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