This US Dollar rate forecast discusses the likelihood of a rise in US interest rates in June and also looks at factors that could affect USD exchange rates.
As well as making significant gains against the Euro this week, the Pound has also made inroads against the USD since Monday, spiking to some of the best levels to purchase Dollars we have witnessed in 2016. It is the EU referendum that is dominating the headlines and playing a key part in determining currency movement, and this has helped the Pound gain against the Greenback despite the chances of a rate hike in the US looking more and more likely.
On Tuesday evening, Federal Reserve member Patrick Harker stated that due to the US economic recovery in recent months, there will likely be two or perhaps even three rate hikes over the course of the year. The next interest rate decision from the Fed is the 15th June, but I personally think it is highly unlikely that there will be a rate hike whilst the EU referendum is looming. The Fed will have 4 more chances to raise rates in 2016 in July, September, November and December.
I believe that investors are more likely to be holding out for Janet Yellen’s speech on Friday. I feel that she may be fairly bullish and as a result we could see some USD strength for the end of the week. There is also a raft of data from the US over the next few days that could strengthen the Dollar further including jobless claims and Q1 GDP figures. An improvement in these are expected, both of which are heavily linked to interest rate changes, therefore we may see GBP/USD fall back below 1.45.
If you have a pending US Dollar purchase it may be sensible to lock in your rate this morning through the use of a forward contract, paying a small deposit to secure the rate for up to 18 months in advance.
If you have an exchange requirement and would like to look at your contract options, please click here. Alternatively, if you would like to discuss anything in this report please email me at email@example.com.
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