US Dollar to Pound Outlook – What next for GBP/USD exchange rates?

Dollar continues to perform well against the Pound

The US dollar has been performing well against sterling in 2019, having very recently touched the best rates since the Brexit vote in 2016. This is a combination of sterling weakness on UK political uncertainties, combined with a stronger dollar as the market embraces its more positive economic outlook.

US dollar exchange rates have been improving in strength over the last few years, as the market responds positively to the improvements in the US economy in recent years, plus the higher interest rates on offer in the United States.

Often, in the currency markets a higher interest rate will lead to a stronger currency. This has been the case with the US dollar, where we have seen it rise in value with the US interest rate still the highest amongst the world’s leading economies.

What could effect GBP/USD exchange rates?

For GBP/USD levels ahead, key information on Brexit may continue to be a driver. Brexit has been one of the defining factors for the pound, leading to big swings on sentiment. Recent optimism that no-deal will be avoided in October has helped the pound to rise. However, it might be argued such a view will only last for so long, before the recurring question of ‘what does Brexit mean?’, is asked again.

Will the US Federal Reserve cut interest rates again?

On the US currency side, the market will be keen to see just how the US economy is performing with key questions ahead on whether or not the US Federal Reserve will look to cut interest rates again.

Weaker than expected Manufacturing data had fueled fears the US economy was on the wane, but despite concerns, the US economy is still growing faster than the UK and the Eurozone.

For the rest of this week, the latest European Central Bank (ECB) decision on Thursday could provide clues on future economic policy in Europe. This can influence EUR/USD exchange rates, which can have a knock-on effect on GBP/USD.

For more information on the latest news and events to move your rate, plus to chat with an expert on the ins and outs of transferring money overseas, please do get in touch to discuss further.

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