Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements in just a month affecting US Dollar rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
Yesterday was Thanksgiving in the US, and Donald Trump gave a speech via video conference which was aimed at US soldiers in Afghanistan, Iraq and various other warzones. In his speech he highlighted the stock market being at a record high, a strong jobs market and positive economic growth, and told troops that they can look forward to ‘big, beautiful fat tax cuts’ when they come home.
However, a recent Reuters poll has showed that a majority of economists are not expecting these tax cuts to be pushed through Congress this year, and are also doubtful of whether they would give the economy any significant boost.
Although economic data was limited in the US yesterday due to the holiday, the US Dollar continued to weaken against the Euro throughout the course of the day. This weakness was triggered by the minutes released on Wednesday evening from the Federal Reserve’s latest Interest Rate decision. Although it was confirmed that they would likely raise interest rates in the near future, several rate setters said that their decision would be determined by whether inflation gathers pace. Markets had been expecting an almost certain interest rate hike at their next meeting in December, and this news spooked investors who moved their funds out of the US Dollar.
It is still widely expected that the FED will raise rates at their next meeting in December, and therefore I feel that the probability of this has been priced in to the value of the US Dollar. If the FED surprise the markets and keep rates on hold, I would expect the Dollar to weaken dramatically, therefore planning any short to medium term transfers around this key event could save you thousands.
This afternoon Markit will release their Manufacturing and Services PMI data for November. Expectation is for an improvement compared to the previous month, so if this follows the recent trend of positive data to come out of the US, we could see the USD regain the lost ground from yesterday.
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