The Pound has hit its lowest level versus the US Dollar in five months after a poor run of data recently in the UK.
Consumer credit lending has also dropped to its lowest level since 2012 and manufacturing has fallen to its lowest level in a year and a half. The bad news was compounded with last week’s UK GDP data for the first quarter of 2018 which came out at just 0.1%. After having a relatively good period just a month ago the Pound is really starting to show signs of a struggle against a number of currencies including the US Dollar.
Why is the US Dollar strengthening?
It is not just the Pound that is weakening but also the US Dollar has gained in strength as USD/EUR rates are now their highest in months. The US Federal Reserve have increased interest rates a number of times during last year and further interest rate hikes are expected this year and this is providing the Dollar with a lot of strength.
The US 10 year bond yield has now hit 3% and this has encouraged global investment to move towards the US Dollar and even earlier this morning the Interbank level hit 1.35 creating some excellent opportunities for anyone looking to sell Dollars to buy Pounds.
We end the week with a huge amount of economic data primarily covering the jobs markets in the US. US Non-Farm Payroll data for April is expected to show 198,000 new jobs created outside of the agricultural industry but as this is notoriously difficult to estimate accurately often the figures can be dramatically different and this will often cause big movements for GBP/USD exchange rates. The data will also have a big effect on what the Federal Reserve will do going forward so if you’re in the process of making a transfer make sure you keep a close eye out for the fireworks on Friday afternoon.