Pound to US dollar rate: US interest rates in focus

GBP USD Exchange Rate Pulls Back as UK Inflation Hits Fresh 40-Year High 

Cable exchange rates start the day at near 2 week highs following Federal Reserve Chairman Jerome Powell’s comments last night which suggested that the Federal Reserve are open to a rate cut if necessary, following heightened trade tensions between the US and its global trading partners.

How have interest rate talks affected pound to US dollar rates?

Speaking at a conference in Chicago on Tuesday night, he added that he doesn’t know when the issues surrounding the latest spat with China will be resolved. He went on to voice his concerns that the standoff could start to create a lag on economic performance within the US, and therefore lead the central bank to make a decision that will force them t to tighten their monetary policy.

Whilst the recent comments have had a positive effect on US treasuries, hitting highs not seen since 2017, the USD has seen its levels of support soften this week. Sterling has started to claw back some of its recent losses against the Greenback, moving back above 1.27 this morning. This improvement for GBP has come despite the on-going political uncertainty that has engulfed the UK, with no clarity on who will lead the country forward and what economic policies will entail.

Without-going Prime Minister Theresa may stepping aside on Friday, it is likely a hard-line Brexiteer will be walking into number 10 over the next couple of months.

Today’s economic data that may affect the pound to US dollar rate

Today’s focus will be on data from both sides. In the US, May’s ADP unemployment rate will provide an insight into Friday’s Non-farm Payroll data followed by ISM non-manufacturing data. In the UK, the important PMI services data will be released this morning and will be closely watched. Poor performances in the manufacturing and contraction PMI’s have been overlooked but sue to 80% of UK GDP being made up of services, this data release carries more weight and could cause Sterling to lose ground if this data follows suit and disappoints.