Pound Vs US dollar: Powell hints at a rate cut

Pound Vs US dollar

Pound Vs US Dollar exchange rates have pushed back from yesterdays low of 1.2485. GBP/USD has pushed back through 1.25. This comes following comments from the Fed Chairman Jerome Powell.

He indicated in his speech that the current US/China trade war was a major reason for this. He felt a interest rate cut at the Feds next meeting will be seriously considered. This would be the first cut in a decade.

Many analysts were arguing that they felt it was too early for the Fed to look at cutting the base rate from its current level of 2.5%. Powell’s comments seem to buck these thoughts. The market appears to be now pricing a cut on the 31st July.

Will the US Dollar weaken?

Overnight we have seen the US dollar fall in value. Although many analysts thought it was too early for a rate cut, it is still not a major surprise it could happen. Therefore I do not feel we will see any significant devaluation for the US dollar with Brexit and political instability in the UK still set to dominate the GBP/USD pair.

Avoiding adverse exchange rate movements

Current sterling exchange rates are precariously placed and vulnerable to some significant downside losses. Particularly if we leave the European Union without a deal. With this in mind, anyone purchasing property in the Eurozone or elsewhere in the coming months, should take steps to ensure that a sudden movement in the value of the Pound doesn’t increase the cost of your property unnecessarily.

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