Tuesday, 16 May 2017

Pound/dollar exchange rate update

It has been a mixed day for the GBP/USD cross, with the currency pair bouncing between $1.2950 and $1.2870.

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This morning saw the pound take full advantage of the latest news surrounding President Donald Trump, with the GBP/USD cross rising around half a per cent.

GBP/USD graph

Media reports stated that President Trump had disclosed sensitive data during a meeting with the Russian foreign minister last week, something the White House quickly dubbed as fake news.

Fears within the market are starting to mount that Trump may not see out his first term, and it is starting to impact the value of the dollar.

Since Trump won the election in November the dollar's value has soared, after he promised to boost economic growth and cut taxes. However, since taking office Trump has been unable to deliver any of his major campaign promises, and if he continues to make the headlines for the wrong reasons we could easily see the dollar give up even more ground.

Inflation hurting the pound

As you can see from the graph above, the pound suffered a sudden drop this morning after the latest UK inflation figures were released.

Figures produced by the Office for National Statistics showed inflation had risen to 2.7%, up from 2.3% last month.

A rising inflation reading would usually help strengthen a currency, but with the Bank of England set to let inflation continue to sit above their 2% target, and an interest rate hike unlikely to come during the Brexit negotiations, the pound fell against a basket of currencies.

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