Wednesday, 1 March 2017

USD strengthens as interest rate hike looms

We were expecting a little more volatility in the markets this morning following President Trumps speech to congress last night, but he didn't really offer any details on his tax plans or stimulus measures as we had expected. Instead he just repeated what he had already said about tax relief without giving any actual details.

USD stronger as interest rate hike looms


Market reaction was muted as a result, however hints from the FED that an interest rate rise is very likely this month has strengthened the USD and pushed GBP/USD rates a little lower.

Pound/Euro has risen a little as the Euro weakened due to it's inverse relationship with the Dollar, pushing GBP/EUR up half a cent to around the €1.1750 mark. We also had some weaker than expected data from Germany and the EU a little earlier weakening the single currency slightly.

What could move exchange rates today?


This morning from the UK we'll see the latest mortgage approval numbers along with manufacturing data. These will be watched closely, the manufacturing numbers in particular, as I think we'll see signs of a slowdown in this sector. If the numbers are lower than expected showing the economy is slowing, the Pound may weaken off a little.

As I've mentioned a few times recently, this month Theresa May will trigger article 50 which many in the market are saying could be the catalyst for a Sterling sell off, and we may see exchange rates move lower. There could also be further Brexit news today as the House of Lords is expected to ask for an amendment to the draft legislation in order to protect the rights of EU citizens living in the UK. The debate starts at 15:30pm with a vote expected by 6pm.

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