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GBP/USD Skyrockets on Dovish Fed Signals

Last week’s high: $1.2722

Last week’s low: $1.2513

 

US Dollar Sinks on Fed Rate Cut Expectations

The Pound US Dollar exchange rate roared higher last week on the back of increased odds that the Federal Reserve will soon begin to reverse some of last year’s rate hikes.

This comes after the Fed sent a clear signal that it would take any measure appropriate to shore up the US economy against global and domestic risks.

Meanwhile the Pound’s gains were capped somewhat in the wake of the Bank of England’s own policy meeting in which expectations of a more hawkish rate outlook failed to materialise.

 

USD Outlook: Political Risk Remains in Focus

Looking to the week ahead, we may see the GBP/USD exchange rate continue to accelerate if the case for the Fed to lower rates next month is bolstered by a subdued PCE inflation reading in May.

However we could still see the US Dollar rise if increased tensions in the Middle East leads to more safe-haven demand.

Meanwhile the focus for GBP investors this week will likely turn back to the Conservative leadership contest, with the Pound potentially facing some pressure if the two remaining candidates are seen as increasing the risk of a no-deal Brexit.

 

Key Events

24th Jun

15:30 US Dallas Manufacturing Index (Jun)

25th Jun

15:00 US New Home Sales (May)

26th Jun

09:30 UK Mortgage Approvals (May)

13:30 US Durable Goods (May)

27th Jun

13:30 US GDP Final (Q1)

15:00 US Pending home Sales (May)

28th Jun

09:30 UK GDP Final (Q1)

13:30 US PCE Price Index (May)

 

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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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