Last week’s high: $1.2573
Last week’s low: $1.2397
Global Growth Fears and Geopolitical Tensions Bolster Safe Haven Demand
The Pound to US Dollar exchange rate attempted to advance at multiple points last week, but the pairing failed to sustain any considerable gains until the final hour.
The US Dollar’s safe haven appeal provided support for the currency through much of the week, with geopolitical tensions following the drone attacks on Saudi oil fields and concerns for a global growth slowdown leading to a more reticent market. A less dovish than expected tone from the Federal Reserve also contributed.
This left the GBP/USD exchange rate largely flat, with investors hoping for another Sterling rally but left disappointed as news of a possible UK-EU Brexit deal remained elusive.
Sterling finally saw an uplift in the eleventh hour when European Commission President Jean-Claude Juncker offered fresh optimism on Friday, stating ‘we can have a deal’.
USD Outlook: Could Fed Rate Cut Bets Still Rise if Upcoming US Data Disappoints?
The Federal Reserve continued to express confidence in a ‘resilient’ US economy, quelling speculation for further US interest rate cuts.
However, any disappointing US data this week could restore expectations for more rate cuts.
US growth rate data is due for release on Thursday, and Personal Consumption Expenditure (PCE) data comes out on Friday. As PCE is the Fed’s preferred litmus test for inflation, any surprises could prove influential.
Sterling investors, meanwhile, will focus on Brexit news, with any further optimism and signs of a deal being struck before the October deadline likely to offer a step-up to the Pound.
13:30 US Chicago Fed National Activity
14:45 US Markit PMI Projections
13:30 US Growth Rate
13:30 US Wholesale Inventories
13:30 US Personal Consumption Expenditure (PCE) Inflation Rate
13:30 US Durable Goods Orders
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