The FED will give their latest monetary policy update tomorrow, with the latest non-Farm figures released on Friday US Dollar bulls are out in full force with expectations for the first of three rate hikes to be announced tomorrow.
The US economy has gone from strength to strength since the turn of the year, which in President Trump’s eye appears to coincide with his appointment back in November. It’s yet to be seen how Trump’s policies are driving the economy, but with strong unemployment figures and non-Farms on Friday US Dollar investors are almost certain the FED will act tomorrow.
Markets priced in tomorrow’s event
It’s likely that markets will have priced in a hike tomorrow, but what investors will be watching out for are signs of future monetary loosening.
With expectations for two further hikes this year, the question of when will play an important part in shaping the US Dollar in the months ahead.
President Trump has insisted that the FED should act to raise interest rates quicker than projected, and given his economic plans to stimulate the economy and create more jobs, the FED may have to play catch up sooner rather than later.
GBP/USD to hit new record lows?
With the FED expected to raise interest rates coupled with Brexit uncertainty as Government prepare its EU-exit, there are arguments to support further downturn for GBP/USD.
If the FED act in raising interest rates tomorrow and the UK Government move ahead with their end of March deadline for Article 50, I envisage GBP/USD to fall to ranges of 1.17-1.18 as we enter April.