Whilst I do remain sceptical that the FED will raise interest rates in September, markets are growing increasingly optimistic that one could be on its way, if not December.

Friday’s Jackson Hole conference opened the door to a much more hawkish Janet Yellen, which has seen the odds of a rate raise improve drastically before the end of the year.

Friday’s Non farm and unemployment data

This Friday’s releases could hold the key to a FED hike. Yellen is very focused on bringing unemployment down as she views it as a strong performance measure within the economy. Without question, markets will be watching this data with scrutiny.

If the data projects a strong performance GBPUSD exchange rates could fall back into the 1.29’s. More importantly, this could also be a signal for the FED to raise rates in their September meeting.

Will the FED raise interest rates in September?

The odds of a raise in September have improved, but are still unlikely given the upcoming US election. Whilst the FED must separate itself from political ties, this year’s election has the potential to rattle markets given the nominees. It would not be in their interest to ignore any market volatility as a result of this year’s election.

That being said, a hike in December could well be on the cards, if you are looking to buy US Dollars in the very short term, doing so ahead of Friday’s non farm figures could be argued. However I am expecting Sterling to strengthen against the US Dollar as we approach the US elections.

Whilst many are not expecting Donald Trump to win the US elections, I am sceptical of a Clinton landslide. I personally believe that this election will be much closer than some anticipate which could put serious pressure on the US Dollar.

On the other hand, if you have US Dollars to sell for Sterling, just a friendly reminder that the US Dollar still sits near a 31-year high against Sterling.