The US Dollar has continued to show signs of strength ahead of a US Fed interest rate decision and inflation data. Chairlady Janet Yellen is expected to announce another interest rate hike for the US this year, with the rate moving to 1.5% which will be the third time in 12 months. The markets may have already priced the latest hike in, hence why we have seen the US Dollar strengthen against several currencies in the past few days.

There is also expected to be an improvement in inflation with the level expected to rise up to 2.2%. Earlier in the year there was some questions arising as inflation fell below the 2 percent level, however in the last three months inflation has started moving back to the 3% level. Tomorrow, if the data comes in above the forecast the US Dollar could make further gains with the GBP/USD exchange rate falling into the 1.32’s.

Janet Yellen’s questions and answers will be her penultimate before new Fed Chairman Jerome Powell takes over in 2018. Whilst its unlikely she will offer any surprises, there have been hints of another three rate hikes next year and she could confirm those in her statement.

Retail Sales to end the week

On Friday the latest Retail sales will be released and they will include this year’s Black Friday sales, which were record breaking. This could provide the US Dollar with a boost at the end of the week. In my opinion this will only be adding to further gains. If you’re looking to sell US Dollars before the end of the year this could be your window of opportunity. The last time the rate was at this level was the end of November and as we turn the year I believe Sterling could start to make back some of the lost ground as Brexit talks could potentially move to the next stage soon.