The US dollar continues to see a volatile period as the stalemate on trade between China and the US continues. US Treasury Secretary Steven Mnuchin yesterday announced that he was proposing a meeting to work on a trade deal between the two nations. US President Donald Trump has shown no signs of backing down on his trade policy with China and has signalled that he is prepared to introduce further tariffs.
The dollar however remains incredibly strong with excellent levels for USD GBP. The dollar remains a safe haven currency and this is clearly being demonstrated at a time when protectionism and trade wars is the order of the day. It would appear that this is unlikely to change for the foreseeable future. However it is worth highlighting that the NAFTA agreement between the US, mexico and Canada is slowly but surely progressing which does signal that the US is open for business and that the current trade wars may come to an end after agreements are made, which should be good for dollar exchange rates.
The US Federal Reserve are expected to raise interest rates later this month which will be the third interest rate hike this year. This is also expected to lend support to the dollar and should another rate hike take place in December the dollar could rally further still.
GBP USD – Brexit Meeting
Today sees a UK cabinet meeting specifically to discuss preparations for a no deal Brexit. There is likely to be considerable interest in this meeting today and any developments or soundbites are likely to see the pound react. Any suggestion that Britain could end up with a no deal that falls back on WTO rules is likely to see the pound fall in the short term due to added uncertainty. In my view this meeting is likely to overshadow the Bank of England interest rate decision which is also held today. Rates are expected to be held this month and the markets are not expecting much volatility from this specific release. News on Brexit in these coming days will be the biggest driver for GBP USD.
If you would like to know more about US Dollar exchange rates you can send me a message directly using the form below: