Todays interest rate decision from the FED could be a crucial one for GBP/USD. If Yellen takes a dovish stance to the US economy GBP/USD could break the 1.30 mark for the first time since September 2016.

Yesterday the USD came close to testing the 1.30 barrier and in my opinion, I think that any clients looking at buying Dollars could see a window of opportunity today or tomorrow.

The reason for this is the US Federal Reserve Interest Rate decision and subsequent monetary policy statement today. Recent economic data from the US has been slowing, moving from where it needs to be to warrant a rate hike.

On Monday, whilst the UK and most of Europe had a national holiday, Markit Manufacturing Data came in well below the previous month and this month’s expectations, signalling that the US economy may well be starting to cool down.

Whilst the markets aren’t expecting an interest rate hike today, guidance towards future policy in the up and coming months will it be a key driver for Cable rates. If Janet Yellen, Governor of the Federal Reserve takes a dovish tone, then I would expect the USD to test the 1.30 barrier.

What next for the US Dollar?

Trump shutdown saga

Outside of economics, Donald Trump is still causing shockwaves after the Senate avoided a total shutdown earlier this week. Despite refusing to fund Trumps wall they did agree to a budget of around $1.5bn for border security. However in a turn of events last night President Trump tweeted the country may need a “good shutdown” in September.

The President also made the point to tweet that he was 60 votes short to pass bills in the Senate so he will need more Republicans voted elected or change the rules. Considering this announcement was made through the night on twitter, this goes to show the markets could take a major turn at any moment.

Data this week

Looking past today’s interest rate decision there are two economic data releases that have the capability to influence exchange rates. Jobless claims data is released tomorrow, followed by the highly anticipated Non-farm payroll data on Friday. For USD sellers, if you have an imminent trade, I would suggest speaking to our dedicated team of brokers to make sure that you well covered if this data is disappointing.

We could see multi month highs for GBP/USD this week, and those with a US Dollar buying requirement may be tempted to cash in on current levels. Call our trading floor on 01494 725353 or email myself here if you would like to discuss a quote.


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