GBPUSD Forecast: US Federal Reserve Keep Interest Rates on Hold as GDP Falls 4.8 Percent

GBP USD Exchange Rate: The Week Ahead November 08th

The US Federal Reserve confirmed that they would be keeping interest rates on hold for the time being allowing them to take stock of their recent interventions.

The central bank has already cut inters rates to historic lows as well as introducing stimulus packages to the economy worth us to US$3trn in order to support the world’s leading economy. With the US having only began the lockdown towards the end of March the first quarter GDP figures which were published earlier today also showed some very concerning statistics.

US GDP Falls Causing GBPUSD Movement

During this period the US economy contracted by 4.8% which is rather alarming. However, as the US was only in lockdown towards the end of this period it goes to show how much pressure could be put on the US economy during this quarter if lockdown measures continue.

Therefore, this is one of the main reasons why Trump wants to open the economy again as quickly as possible. Indeed, the contraction in growth was the first fall since 2014 and the biggest drop in over ten years.

Coronavirus Lockdown and the Impact on US Unemployment

So far since the lockdown began we have seen more than 26 million people file for jobless claims and that figure to set to rise even further towards the end of this week when more data is announced.
The main reason for GBPUSD exchange rates remaining relatively low is that the US dollar is used as a safe haven currency and I think whilst the global economy remains in lockdown I think we could see the US dollar maintain its recent strength seen in recent weeks particularly vs the Pound as well as against the euro.

Therefore, if you’re in the process of selling US dollars it may be worth keeping a close eye out on GBPUSD and EURUSD exchange rates in the near future.

If you have a currency transfer to make involving pounds and US dollars and would a free quote compared to using your own bank then contact me directly. We are operating business as usual so feel free to send me your enquiry and I look forward to hearing from you.