Friday, 18 November 2016

U.S. dollar rises after Fed hint at rate hike

The GBP/USD cross has fallen away from the highs we witnessed yesterday morning, with the currency pair falling from $1.25 to its current level of $1.2404.

Want the best GBP/USD exchange rate? Click here.

As I mentioned in my last post, there were a number of key eco-stats and speeches coming from the U.S yesterday, and the results helped the dollar to strengthen across the board.

GBP/USD graph

Positive day for the U.S.

The latest Building Permit, Housing Starts and Unemployment Claims all beat expectations, while inflation in the U.S. came in as predicted and helped the dollar put an end to the pounds advances.

The dollar then received another boost as Federal Reserve Chair Janet Yellen testified in Washington. After almost a year of dovish comments, Ms Yellen finally hinted the Fed are likely to raise interest rates while speaking in front of the Economic Committee.

Although Yellen held back from saying the central bank will raise rates at their December policy meeting, she did confirm a rate hike was coming "relatively soon".

Judging by how the dollar had gained against its counterparts since yesterday afternoon, it would seem the markets are now starting to price in a rate hike on the 14th December. However, we shouldn't get too carried away, as we have seen this kind of reaction a couple of times over the course of this year.

Yellen's comment of "relatively soon" does not guarantee a rate hike next month, and if the Fed fail to take any action in December then we will probably see the dollar weaken significantly.

Do you need to buy or sell dollars?

If you have a requirement to buy or sell dollars in the weeks or months and want to ensure you are making the most from your transfer, contact me today for a free, no-obligation currency consultation.

As a specialist in currency exchange, I have a wide range of tools at my disposal to help protect you against adverse market movements or target a rate of exchange that might not be currently available.

For more information about how I can help or to find out what rate of exchange I can offer complete the contact form by click on the link below.

Click here to complete the contact form.