Market News Rate Alert

 

Market News Rate Alert

GBP/USD at a 3-month high

Having seen GBP/USD breach 1.21 this morning for the first time in 3 months, it shows investors are keeping a keen eye on interest rate forecasts in the US. With announcements earlier this month showing that US inflation was significantly lower than its European counterparts at just 7.7%, the Federal Reserve are now having to reconsider their aggressive hiking approach. It comes at a time when central bank officials are suggesting that the Fed should slow down the pace of future hikes and could be realised in December’s announcement which suggests that a smaller 50 basis point hike is more likely than the recent 75 basis points.

So what does this mean for exchange rates? Typically, most interest rate hikes lead to currency strength so one theory is that the USD will continue to weaken off the back of this news, despite the shaky economic footing the UK finds itself on currently. For clients holding off selling USD and looking to buy pounds, since the 50-year high at the end of September with the Kwarteng budget, rates have continued to move higher suggesting that trading sooner rather than later may be prudent.

Should you have a near-term FX requirement, please reach out to your account manager here at Moneycorp on 0207 589 3000

 

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