This evening it is expected that the US Federal reserve will raise interest rates for the second time this year which will see the interest level move to 1.25%. The main driver for this was the announcement that the US Unemployment rate is at a 16 year low of 4.3%. Furthermore economic growth appears to have jumped up following a lacklustre first quarter.
This strong opinion regarding the US interest rate hike is held by many economists, and following FED members communications, the writings pretty much on the wall. However, there is always a significant margin for error with these things. The recent strength seen for the US Dollar has come of the back of the markets pricing in the potential hike. In my opinion the GBP/USD level could move even further toward the 1.25 mark if the rate hike happens. Previously the Federal Reserve have been dovish and can often demand the perfect economic conditions in order to raise rates. While the economic situation seems firm, the political scene is far from that.
Trump and Russia Scandal
President Donald Trump is at the centre of events in the Senate as the investigation into whether the relationship with Russia breaches the laws. Jeff Sessions who is the US Attorney General offered very little in regards to new information and if anything chose to share nothing. Quite the opposite from former FBI Director James Comey who seemed rather scathing and happy to insinuate Trump over stepped the mark.
Whilst it seems very hard to believe Trump will be pulled in front of a court at any point, one thing for sure is that controversy seems to follow. Over the next few days the US Dollar could move significantly either way.