Thursday, 23 February 2017

GBP/USD exchange rate hits two week high

The GBP/USD cross rose to $1.2555 this afternoon, the highest we have seen the currency pair since the 9th February after the U.S. dollar lost ground against a basket of currencies.

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After spending the majority of yesterday's trading session bouncing between $1.2470 and $1.2430 the pound has been able to take advantage of the weakening dollar, as you can see from the graph below.

GBP/USD graph

Why has the dollar weakened?

The dollar's value started to fall following the release of the Federal Reserve meeting minutes on Wednesday evening. Although the minutes stated a March interest rate hike is still on the cards, investors were left disappointed because of the lack of urgency shown from the voting members.

Markets had been hoping the minutes would provide a clear insight as to when the Federal Reserve would increase their benchmark rate and back up the recent hawkish comments from Fed Chair Janet Yellen. 

The dollar has also been hurt by the lack of progress from some President Trump proposed policies. Since his initial announcement, Trump has failed to provide any further information about his "phenomenal" tax reform, which has caused investors to hold back from heading into the U.S. dollar.


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