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 in Dollars when purchasing £200,000.00 at the low and high levels during the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBPUSD2.1%$5,450

Will the Dollar continue to strengthen against the Pound?

The US Dollar has maintained its recent strength vs the Pound during the course of this month, and with tonight’s Interest Rate decision I think we could see further gains ahead this side of the year for the Dollar vs Sterling.

According to most sources it is almost a certainty that the Fed will increase interest rates for the third and final time this year. With the US Consumer Price Index due to be published at 13:30 today this could provide further evidence as to what may happen to monetary policy going into 2018.

Trump’s Tariffs could cause US Dollar weakness

Fed Interest Rate Decision Due Tonight

Therefore, it will be the press conference that will provide us with further clues as to what they will look to do next year. Indeed, current Fed Chair Janet Yellen will be standing down on February 2018 and will be replaced by Jay Powell who will be taking over so this press conference will be her last following an interest rate decision. Her tone is likely to be a cautiously optimistic one, and she is likely to be so in order to allow incoming Chair Powell full rein when he comes in.

US GDP has been at 3% recently which is very strong compared to what is happening in both the UK and the Eurozone and another justification for the rate hike.

I don’t think it will be the rate decision that moves GBPUSD exchange but the accompanying press conference could cause movement for rates.

At the moment the expectation for another rate hike in 2018 is for another 0.25% rise so I think we could be in for a sustained period of Dollar strength vs the Pound.

However, one real risk to what could happen for GBPUSD exchange rates is with the ongoing Brexit talks due to commence tomorrow so make sure you’re well prepared for the volatility ahead.

Therefore, if you’re looking at buying US Dollars it may be worth securing your currency in advance of the meeting. If you don’t have the full availability of funds then speak with your account manager about how a forward contract may work for you.

Thank you for reading today’s US Dollar report, I would greatly appreciate any feedback you have and would take pleasure in replying personally. Feel free to get in touch for more information on 01494 725 353 or via email, here.

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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.