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GBP/USD Rallies on Fed Rate Cut Speculation

Last week’s high: $1.2745

Last week’s low: $1.2610

 

US Dollar Bludgeoned by Rising Rate Cut Odds

The Pound US Dollar exchange rate rallied last week, with the pairing climbing around a cent amidst growing speculation that the Federal Reserve will be forced to lower interest rates.

Fueling this speculation were comments by Fed Chair Jerome Powell in which he pledged to take ‘appropriate measures’ to protect the US economy against a trade war.

Adding to this was also the latest US payroll figures, which revealed that employment growth slowed sharply in May.

However it wasn’t all plain sailing for the Pound either, with Sterling’s gains being tempered at the start of the week due to some lacklustre PMI figures.

 

USD Outlook: Political Uncertainty to Sink Sterling Sentiment?

Looking to the week ahead, we may see the GBP/USD exchange rate beset by volatility as the Conservative leadership contest gets underway, with a strong showing by any of the hardline Brexiteers likely to unnerve investors.

Potentially putting even more pressure on the Pound will be the UK’s latest employment figures as economists forecast wage growth will have continued to slow in April.

Meanwhile the focus for USD investors is likely to be on the US CPI report, where an expected dip in inflation will potentially drag on the US Dollar.

 

Key Events

10th Jun

09:30 UK Trade Balance (Apr)

09:30 UK GDP (Apr)

09:30 UK Industrial Production (Apr)

15:00 US JOLTs Job Openings (Apr)

11th Jun

09:30 UK Unemployment Rate (Apr)

09:30 UK Wage Growth (Apr)

15:00 US Factory Orders (Apr)

12th Jun

13:30 US Inflation Rate (May)

14th Jun

13:30 US Retail Sales (May)

15:00 US Consumer Sentiment (Jun)

 

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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

 

 

Alastair Archbold

Foreign Exchange Manager

aja@fcgworld.co.uk

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