The US Dollar continues to make inroads against its Sterling counterpart, following the recent decision by the US FED to hike interest rates up to 0.5%. GBP/USD rates dropped to 1.2207 at yesterday’s low, which is over five cents lower than they were at the start of the month. Whilst the rate hike was expected it has been the subsequent bullish statements from President elect Donald Trump and also head of the FED Janet Yellen, which helped to solidify the USD’s current position.
With talk of further rate adjustments in 2017 alongside improved growth forecasts for the US, the US Dollar has risen close to a 31 year high against Sterling. This has once again provided those clients holding the greenback with a fantastic opportunity to sell their positions, ahead of what is likely to be a turbulent year in 2017 for the global markets.
Whilst GBP/USD rates are being driven by positive sentiment surrounding the US economy and the uncertainty that continues to surround the UK’s Brexit, market conditions can change extremely quickly and without warning.
Personally, I do not expect the US Dollar to break through 1.20 and for this reason I would be extremely tempted to secure any US Dollar selling positions sooner rather than later.
We need to consider that any positive momentum following the triggering of Article 50 and/or any slight downturn in US economic data (or controversial comments by Mr Trump) could lead to a shift in momentum.
The scope for US Dollar weakness far outweighs the upside return in my opinion and considering the FED were expected to raise rates up to four times this year and have only just done their first, I would certainly be looking to take advantage of the current levels.
To learn more about what is driving US Dollar exchange rates in 2017, call our team of experts on 01494 725 353 and they will be more than happy to assist you with any questions.
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