The pound to US dollar level could be in for a choppy few sessions, as the market continues to debate the likelihood of the US Federal Reserve cutting their base interest rate. Against a slowing global economy, the US central bank might be forced to reconsider their policy for the future.
GBP/USD levels have risen fractionally yesterday, following the release of the latest UK economic data highlighting rising wage growth.
Global economy slowing
The general expectation for the future on the global economy is for it to be more sluggish, as the market prices in the general trend of falling growth. The trade wars are a threat to the stability of the global economy and could see increased pressure for the US Federal Reserve to cut rates.
Their next meeting is the 19th June, so we could find out very soon just how the US central bank views what lies ahead. Expectations are mixed, but the general trajectory appears to be leading to a cut as the conditions that led to numerous hikes begin to fade.
Conservative leadership contest drives pound to US dollar rate
The conservative leadership contest is also a factor in all of this, that could weigh on economic sentiment. At the moment, the campaign is providing insight into how varied the outlooks on Brexit can be, with each Conservative candidate seeking a slightly different approach.
I think the pound will now continue to struggle and expect GBP/USD levels to remain fairly range bound between 1.25-1.27 for the rest of this week. Further economic news will be released for the US at 13.30 today, with the latest Inflation data released. This could provide some further clarity on whether or not the US Federal Reserve will be looking to cut interest rates ahead, if Inflation is shown to have fallen, the case for lowering interest rates will rise.
If you have a transfer to consider in the future buying or selling the pound against the dollar, please get in touch to discuss the latest forecast and your options.