Pound to US Dollar forecast: When will the Fed cut interest rates?

GBP USD Jumps to Fresh March High

When will the US cut interest rates?

On Wednesday the Federal Reserve announced that they would once again keep interest rates on hold. However, the accompanying statement suggested that we could see interest rates being cut this year. With such a cautious tone I think Fed Chair Jerome Powell is gearing up to cut interest rates.

US President Donald Trump has been extremely vocal about cutting rates but the Fed will have to remain impartial and independent. However, according to the report 7 of the 17 Fed members expect rates to be cut by 0.5% during 2019.

Powell has claimed that the ongoing US-China trade war is not helping the US economy. Therefore, if this continues to rumble on this could lead to the Fed cutting rates in the near future.

The US dollar weakened against the pound owing to the news from Powell but the trend was short lived. By Friday the US dollar was strengthening once again vs the pound. On Friday afternoon US Services and Manufacturing data came out lower than expected.

Tory leadership battle to cause problems for the Pound

Owing to the ongoing Tory leadership election there is still a real concern surrounding sterling exchange rates. Johnson convincingly won the ballot with 170 votes compared to Jeremy Hunt at just 77. Clearly, Boris Johnson is the clear favourite but there is still some uncertainty.

The new Prime Minister will be announced a month from now so we could still see a lot of pressure on Sterling during the next few weeks. Whilst the uncertainty continues in the UK I think we could see the pound fall again vs the US dollar. Therefore, if you’re planning a buy US dollars in the near future then it may be worth getting this organised in the short term.

If you would like to save money on exchange rates when converting US Dollars then contact me directly for a free quote and I look forward to hearing from you.