The pound to US dollar has weakened as the dollar has continued to strengthen against both the pound and the euro recently.
US Federal Reserve interest rate decision
The US Federal Reserve are due to meet before the end of the month and the expectation is for an interest rate cut. The real decision for the Fed is whether to cut by 25 basis points or 50.
The strongest hint has come from New York Federal Reserve President John Wiliams who said, ‘it’s better to take preventative measures than to wait for disaster to unfold.’ He went on to claim, ‘when you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress.’
Second quarter US GDP data is due out on Friday afternoon. The first quarter showed growth of 3.1% and the prediction is to see growth fall to 1.8%. Therefore, this could provide evidence in support of cutting interest rates.
If you’re in the process of making a US dollar exchange, then pay close attention to Friday’s GDP announcement.
Further US Dollar strength to come?
Later today the US will release existing homes sales for June. The data has been mixed recently so another wobble could see the Federal Reserve bring a rate cut forward.
One of the other major reasons for the ongoing dollar strength is due to the geopolitical tensions. Issues in the gulf have escalated as well as the ongoing US China Trade War. During this uncertain period this is reducing global risk appetite. As the US dollar is used as a safe haven currency this is one of the main reasons for the Dollar’s strength against the Pound.
New UK Prime Minister to be announced today
Later today the new British Prime Minister will be announced. This is expected to see Boris Johnson win convincingly. However, although this could see a small rise in the pound I think the gains will be limited.
Boris has suggested that the UK could still leave the European Union with a no deal Brexit. Therefore, this could keep the Pound under continued pressure vs the US dollar.
If you would like a free quote when buying or selling US dollars, then contact me directly and I look forward to hearing from you.