Local elections cause movement for Pound vs the US Dollar

Pound Dollar rates hit highest level this year

The Pound US Dollar exchange rate has hit its highest level during 2023.

Sterling made gains vs the US Dollar following the news from the local elections showing that the Tories had lost a lot of seats overnight.

With the results still due to come out for many areas it will be interesting to see how this pans out.

Labour has so far gained a huge number as well as the Liberal Democrats compared to previous elections which is not a good sign for Rishi Sunak’s government.

US Federal Reserve hikes Interest Rates again

In the meantime as we turn the focus back towards the US economy we have seen the Federal Reserve increase interest rates yet again.

Interest rates are now sitting at their highest level in 16 years in the world’s leading economy. This is the tenth hike in just 14 months.

One of the main reasons for the US Dollar weakness is that the Fed have suggested that their rate hiking cycle may be slowing down and this could be the last one for the time being.

Inflation has dropped to 5% recently which shows that the Fed’s aggressive policy appears to be working.

Typically the way to combat rising inflation is to hike rates which is what has been done recently.

This has caused the Dollar to weaken as it shows that the rate cycle may be ending which means investors may look at alternatives for yields elsewhere.

It also shows that the economy is starting to settle which can mean that investors are also more confident at placing funds in more riskier alternatives.

For more information or a free quote when buying or selling US Dollars feel free to contact me directly.

I have worked for one of the UK’s longest established brokers since 2003 and would love to hear from you.

Tom Holian [email protected]

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