The latest inflation data for the United States will be released tomorrow and is considered a key indicator of the economy. At the moment there is uncertainty surrounding the final planned interest rate hike for 2017 and a good release could provide confidence that the hike will take place.
US Dollar value hit this week
The GBP/USD exchange rate has moved towards the 1.30 level, mainly due to the increased pressure with the situation in North Korea and the turmoil caused by Hurricane Harvey in Texas. The ongoing storm has so far caused billions of dollars worth of damage and sadly it looks set to continue over the next few days. Once the clean-up operation begins it will become clear as to the cost of the devastation but the US Government will likely need to assist with some of the costs.
This is why we have seen a fall in the value of the US Dollar over the last few days, coupled with the North Korea situation once again flaring up. There is now a concern that after the dictator state fired a missile over Japan the nations are closer than ever to coming to war. The missile fired over Japan could be an indication of North Korea’s wiliness to fire a missile at another country, most notably given their comments, the United States, and this may cause a pre-emptive strike. Worryingly, Donald Trump’s comments on Twitter seem to suggest action.
The U.S. has been talking to North Korea, and paying them extortion money, for 25 years. Talking is not the answer!
— Donald J. Trump (@realDonaldTrump) 30 August 2017
Will there be further US Dollar weakness
In my opinion if there is poor US data tomorrow afternoon then we could see the GBP/USD rate back over the 1.30 level. This coupled with the North Korea rhetoric and the damage being caused by Hurricane Harvey could see the US Dollar come under short term pressure until things are resolved.