The US Dollar has appreciated massively against the Pound hitting the best rates to sell US Dollars for Pounds in 2018. A combination of factors has transpired to push the US Dollar higher as the divergence in both monetary policy and politics, between the US and UK becomes wholly apparent. The rate may well now push lower and break the key 1.30 level of resistance as investors favour the Greenback versus the Pound.
The US Dollar has been rising on global uncertainty as concerns remain over the outlook for the global economy following the Trade Wars. Despite being the chief protagonist of the Trade Wars, investors expect the US economy to still remain strong whilst more of the negative effects will be felt elsewhere.
Clients looking to buy or sell US Dollars should be very conscious regarding a series of important releases in July which could well move the market. The fundamentals regarding the US Dollar and the Pound seem to suggest the US economy will continue to remain strong and interest rates will continue to gently get raised.
This is at odds with the UK and the Bank of England who are currently debating an interest rate hike before the end of the year, current probability is around 50%. GDP data released this morning confirmed the UK economy is on a gentle rise, if July sees a series of positive UK releases GBPUSD should keep above 1.30 and may even press onto the mid 1.30’s again.
Exchange rates often move ahead of events and the current positioning on GBPUSD reflects the expectation the US economy will continue to flourish and further hikes will be forthcoming. Next week is the vital Non-Farm Payroll report which details the change in non-agricultural employment in the US. This is a very important release for the US Federal Reserve to monitor and could see a volatile end to next week. If you’d like further information, or have an upcoming US Dollar transfer please feel free to get in touch to discuss further here.