Trump news sees Dollar weaken – further drop in GBPEUR rates likely

Amidst little economic data releases this week, politics takes centre stage and continues to drive the market and exchange rates. With Donald Trump now firmly in the spotlight, cries for impeachment are increasing following his ex-lawyer Michael Cohen pleading guilty to violating finance laws during the 2016 presidential campaign, and as a result, the USD weakened. In the last 48 hours, we have seen it lose around 2 cents against the Pound and the same against the Euro. This is welcomed for Dollar buyers in the short term as since April of this year the greenback has gained over 10% against Sterling.

Late last night saw the release of the FOMC minutes where many of the main participants suggested that it would likely “soon” be appropriate to raise US interest rates yet again, which did allow the Dollar to claw back some ground – around half a cent against both the Pound and Euro.

Today we have two main events to note – the Jackson Hole symposium, where US central bankers meet to discuss fiscal and monetary policy, and the ECB monetary policy accounts. There is no data of note from the UK and as a result, GBP rate movement will largely depend on news from elsewhere, with the Pound still struggling amidst Brexit uncertainty as Michel Barnier suggests it will be likely November before any and if any agreement on Brexit can be reached.

Albeit the Dollar showed a wobble following the news on Trump, last nights minutes once again supported its aggressive interest rate hike programme and has seen it regain some strength, and it is likely that Jackson Hill will further support that today. Draghi and the ECB are typically good at bolstering the Euro and whilst the Brexit talks slowly move on, the single currency remains stronger the flagging Pound. To add to this situation the weakening of the Dollar is encouraging the Euro to strengthen against the Pound, only adding pressure and meaning should the Trump situation intensify and Dollar rates weaken again we will see GBPEUR rates continue to dwindle in the coming days.

If you have any upcoming requirements, speak to your Currency Index Broker today for some friendly and professional guidance on how to help protect your budget in these ongoing uncertain times.