US producer price data helps boost US dollar
The pound to US dollar exchange rate moved marginally lower yesterday after better than expected US producer price data unexpectedly rose higher helping boost the US dollar. Rates for GBP to USD have slipped marginally lower to 1.2330 but remain at the elevated levels following recent Brexit developments in the UK.
Will the US Reserve cut interest rates next week?
The US Federal Reserve next meet 17th-18th September where it is widely expected that the Fed will cut interest rates by 0.25%. There is some uncertainty as to how much the Fed will in fact cut by though which is keeping the markets guessing. US President Donald Trump has continued to pile on the pressure on the Fed to cut rates further despite the fact that the Fed is supposed to act impartially. The President tweeted last week “I agree with @jimcramer, the Fed should lower rates. They were WAY too early to raise, and Way too late to cut – and big dose quantitative tightening didn’t exactly help either. Where did I find this guy Jerome? Oh well, you can’t win them all!”
This afternoon sees US Consumer Price Index inflation data as well as jobless claims and the data will be keenly monitored for clues as to how much the Fed will likely cut interest rates by.
Brexit meanwhile continues to dominate the headlines in the UK ahead of the 31st October deadline when Britain will officially leave the EU, as things stand. Those with pending requirement to buy or sell US dollars would be wise to consider planning around a series of important development expected in the weeks to come. After the Scottish courts ruled it was unlawful for Boris Johnson to prorogue parliament focus now moves to the hearing at the Supreme Court in England.
It is well known that the Scottish courts and English courts have some different interpretations in the law on constitutional matters. With calls already being made for the Prime Minister to recall parliament now and some from Remain MP’s who wish to see the Prime Minister resign it could make for a volatile week as the path of Brexit is made. It is not clear how Boris Johnson will navigate the required extension that was brought into law and this hot potato could end up resulting in volatility for pound to US dollar exchange rate.
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