GBP/USD exchange rates have reached their lowest levels since December 2018 and some of the lowest levels since June 2017. We have now seen the US dollar rally 6.25% since the beginning of March caused by Brexit uncertainty and the prospect of an ardent Brexiteer taking the helm at number 10.
To compound this investors have begun pulling out of the Euro and piling into the US dollar following comments made by European Central Bank governor Mario Draghi. Draghi in his press conference this morning said the central bank had “considerable headroom” to launch further expansion of its current quantitative easing (QE) programme.
Will the US dollar remain strong?
Following Draghi’s comments US President Donald Trump suggested that Europe was acting to manipulate its currency.
“Mario Draghi just announced more stimulus could come, which immediately dropped the euro against the dollar, making it unfairly easier for them to compete against the USA,” the US president wrote on Twitter.
In response to these comments from the ECB could we see a retaliation from the Federal Reserve at their meeting tomorrow? With unemployment rising and and global trade wars hitting growth, rumours are gathering pace that the Fed are looking to cut interest rates, a move that President Trump has been actively supporting. It may come too soon for tomorrow but comments from Fed Chair Jerome Powell will be closely scrutinised. Hints at a future rate cut and the US dollar could devalue tomorrow.
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