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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.
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