Speaking at the Commonwealth Club in San Francisco, Yellen promised a "few" interest rate rises in 2017 and that the hikes could come quickly.
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Although her latest comments are nothing new (Yellen stated the U.S. central bank could look to increase its benchmark rate three times this year when they raised rates last month), the promise of further action helped the U.S. dollar put an end to its worst run in almost five months.
Her announcement caused the dollar to surge across the board, pushing the GBP/USD cross down to a low of $1.2260, leaving the currency pair almost 1.3 per cent down from the highs of $1.2414 we witnessed on Tuesday evening.
GBP/USD the week so far.
What does it mean for you?
This has been one of the most volatile weeks we have seen for some time, so with that in mind I thought it would be worth looking at the move of pound/dollar in monetary terms.
Over the last four days the difference between the lows and the highs for the GBP/USD cross currently stands at 3.5 per cent. If you were converting £300,000 into dollars, that's a difference of nearly $13,000 and shows how quickly things can change in the currency markets.
What next?
In the medium to long-term, Brexit is going to continue to have an impact on the value of the pound. Although Theresa May's speech this week has provided the markets with some clarity, there is still a long way to go until a deal is struck and things return to some kind of normality.
In the short-term, Donald Trump's Presidency could cause some waves in the currency markets. Investors are still unsure about what his Presidency will actually do to the U.S. economy, and if he fails to deliver on his promises then we could see the dollar weaken.
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