The US economy has been going from strength to strength this year with GBPUSD exchange rates now trading below 1.30 on the Interbank level this morning.
US unemployment is close to record lows, consumer spending is on the up and average wage growth are all looking very positive at the moment which is being reflected in the value of the US Dollar at the moment.
US GDP data has moved to above 4% last month and all the signs appear to be very positive in the world’s leading economy at the moment.
Last week the US Federal Reserve left its monetary policy unchanged but continued to indicate that it would make ‘further gradual increases’ to interest rates.
This suggests that we could be seeing another interest rate hike in the US when the next meeting takes place in September and another reason for my belief that we’ll see further GBPUSD weakness.
The ongoing Trade War issues have continued to help support the US Dollar as Trump has suggested that he may look to raise tariffs from 10% to 25% on $200bn worth of imports from China.
Meanwhile, even though the Bank of England raised interest rates last Thursday this has done little to improve Sterling’s prospects against a number of different currencies including vs the US Dollar.
The lack of clarity surrounding Brexit continues to weigh heavily on Sterling Dollar exchange rates and some have even predicted we could see below 1.10 if a ‘no deal’ situation takes place with the Brexit talks.
Indeed, Theresa May has cut short her summer holiday to meet with the French President Emmanuel Macron to try and take things forward which demonstrates her commitment to try and get things done.
Clearly, the most recent Chequers meeting did not help things and the Pound has struggled since then to make any noticeable gains, which is why I think we could see further losses for the Pound vs the US Dollar
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