G7 finance ministers have shared concerns surrounding global trade wars and the fact that President Trump could be undermining open trade. There is a further G7 summit on the 8th and 9th in Quebec in which the topic of trade wars are likely to be a key point of conversation. The potential impact of this is discussed in our USD report below, with the table explaining the amount in US Dollars you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.
|Currency Pair||% Change||Difference on £200,000|
At the end of last month, US President Donald Trump ordered a 25% on steel and 10% aluminium tariff on imports from Europe, Mexico and Canada. The European Commission retaliated yesterday and suggested that they plan to set tariffs on as much as €2.8billion of US exports and the tariffs could come in by July.
Last weekend all of the G-7 finance ministers and central bankers met to discuss the worrying thought of trade wars and a statement was released expressing concern that Donald Trump is undermining open trade. Furthermore there is a G7 summit on the 8-9th in Quebec, and trade wars will be a hot topic. It appears that the G7 are completely united and Donald Trump’s plans are not supported. A full blown trade wars has the potential to cause havoc on exchange rates. For clients involved with US dollar exchanges I would recommend outlining your position to your account manager.
Last Friday’s job’s report (also known as Non-Farm Payroll) appears to be the final nail in the coffin for the Federal Reserve to raise interest rates on the 13th June. This will be the 7th rate hike since December 2015. Furthermore unemployment numbers remain at record lows and this is another reason to why an interest rate hike is extremely likely. In recent weeks the US dollar has strengthened dramatically against sterling. GBPUSD has dropped 10 cents in the last 6 weeks. To put this into monetary value a $200,000 purchase is now £10,500 more expensive. Even though the market will have priced in an interest rate I still expect a move towards 1.30 is on the cards. Therefore for clients buying US dollars, a trade sooner rather than later may be wise.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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