Major investment bank Goldman Sachs have reaffirmed its thoughts that the US is set to grow by over 2% in 2018. This will also be coupled with unemployment falling below 4% which will take the US labour market back to levels last seen during World War II. President Trump has of course been keen to claim much of this success is about business confidence in his economic plans.
Whilst many will argue about who the growth of the US economy should be attributed to, what is clear is that the US Dollar could be set to strengthen. Investors should be looking at the latest forecast with optimism as steady growth will protect the value of the currency if not strengthen it further. Should these forecasts be delivered upon, the interest rate hikes that have been talked about for 2018 look set to be delivered.
Several Federal reserve members have discussed what they expect to see next year and it appears to involve multiple interest rate hikes. Should this be the case then the US Dollar is likely to strengthen and if Sterling uncertainty continues, the turn of the year could see the GBP/USD exchange rate fall below 1.30 once again.
Sterling strength around the corner?
Currently the GBP/USD exchange rate is settled just above the 1.32 level moving a little either way across the day. The UK do appear to be having a little more success than previous with the chances of Brexit talks moving on ever increasing. Should Sterling receive a “Brexit Boost” we could see the rate move back towards the 1.35 level. Whilst the days of the rate being above 1.40 are probably long gone until Brexit completes, there will be highs and lows following market surprises. It would appear that 1.30 is the GBP/USD rate’s resistance barrier and if you’re looking to sell US Dollars then capitalising on the current position might be your best option.