Gross Domestic Product Data for the US came in exactly as expected at 2.6%.

Despite the Q2 data being considerably better than the previous quarter the US Dollar lost half a cent against Sterling taking the rate back above $1.31.

The main reason for the US Dollar’s demise today is the defeat of President Trump’s alternative to Obamacare. The Obamacare Repeal Bill failed this afternoon providing President Trump with another loss, creating more uncertainty around his position. One of Mr Trump’s main manifesto points was removing Obamacare, however it’s proving trickier than he first thought.

Where to next for GBP/USD exchange rates

The only currency that Sterling has managed to gain any ground against is the USD, more due to US Dollar weakness than Sterling strength.

What this does provide support for is any Sterling strength in the short term could help that rate jump up even higher. Next week the Bank of England will provide their latest interest rate decision which could boost Sterling.

The UK economy has been strong over the past few months, with inflation slowing down last quarter. The Bank of England could be forced to act if inflation levels continue to rise and Mark Carney who is the Governor of the Bank of England may assess this in his speech.

If Mark Carney is optimistic about Sterling, then I don’t think a GBP/USD movement to 1.33 is entirely off the cards.

Janet Yellen who is the Chairlady of the US Federal Reserve earlier this week suggested a US Interest rate hike may now be off the cards for the short term. There has already been 2 rate hikes this year with plans for more, however now that has changed it could mean more weakness coming for the US Dollar.