Since my last post Sterling has climbed nearly two cents to reach $1.62, the highest GBP/USD exchange rates have been since the 3rd January. The pounds performance has been boosted by the news the U.S government is facing a shut down at midnight (EST) unless a new spending bill can be agreed. For more information on live exchange rates click here.
Unless a new plan is agreed before midnight it means from the 1st of October the U.S Government will be forced to shut down for the first time in 17 years. Millions of employees are expected to stop work potentially leaving the U.S economy in a state of disarray.
It is rumoured that a shutdown would last for a couple of weeks which would see any chance of the U.S economy recovering in the short term coming being completely wiped out. Not only will the U.S dollar lose ground against all it's major counterparts on the back of the initial shutdown, it will also mean the Federal Reserve will have to wait even longer to begin tapering, causing even greater loses.
For commercial rate of exchange click here
With the FED wanting to see continued improvement in the U.S economy before scaling back their on going stimulus programme todays news will come as a bitter blow to Chairman Ben Bernanke.
Lets not forget that the U.S government is also facing a battle not to reach their debt ceiling on the 17th October so the next couple of weeks are going to be critical for the future of the economy and the dollar.
Of course if a plan is agreed and a shutdown is avoided the dollar may claw back some of the losses we have seen today. If you need to buy or sell dollars and are worried about exchange rates moving against you simply use the link below to complete the contact form or call me directly on 0044 (0) 1422 892 065 for a free, no-obligation consultation.
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