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Pound Drops against US Dollar after Optimism from Fed Official
Published: 19 Jun at 5 PM Tags: Pound Sterling, Dollar Exchange Rate, Forex, Euro Crisis, UK, Economy, Inflation,
The Pound managed to rise to a high of 1.2810 on Monday’s trading session, but soon fell to a lower rate of 1.2751.
This mixed movement came during the first official Brexit talks between UK and EU negotiators.
The talks began almost on the anniversary of June 23rd's EU Referendum, where the UK first voted to separate from the EU. The news initially boosted Sterling, as both David Davis from the UK and Michel Barnier from the EU made positive statements for their intent during talks.
The Pound’s more recent decline comes from other UK news, this time focusing on the Bank of England (BoE). Less than a week after a Pound rally was caused by Kristin Forbes voting for higher UK interest rates, Forbes’ replacement has been announced.
Forbes is due to leave the BoE on July 7th, when Silvana Tenreyro will take over. Compared to the recently pro-hike Forbes, Tenreyro has historically been a more cautious figure.
In particular, economists have highlighted Tenreyro’s desire in 2015 to impose negative interest rates as a way of managing the economy.
As traders digest what this means for the future direction of the BoE, Wednesday is expected to bring the official opening of parliament.
The Pound may appreciate when the government officially starts, as it will at least mean that someone is at the helm to take the UK into Brexit and out of the EU.
The US Dollar’s late-day recovery against the Pound has come from a statement from Federal Reserve President William Dudley.
The Fed Bank of New York President has been optimistic about the future of the US economy, which has raised hopes of a third US interest rate hike in 2017.
Commenting on recent US jobs and inflation data, Dudley said;
‘We’re pretty close to what we think is full employment. Inflation is a little bit lower than what we would like, but we think if the labour market continues to tighten, wages will gradually pick up, and with that, we’ll see inflation get back to 2%.
I’m actually very confident that even though [economic] expansion is relatively long in the tooth, we still have quite a long way to go. This is actually a pretty good place to be’.
This positive outlook follows a US interest rate hike last week, from 1% to 1.25%. This was largely forecast to happen, but concerns surfaced after the event that there could be no further rate hikes in 2017.
A string of further Fed speeches are incoming, which could push the US Dollar higher against the Pound. These will include remarks from Fed officials Charles Evans, Stanley Fischer, Eric Rosengren and Robert Kaplan.
This mixed movement came during the first official Brexit talks between UK and EU negotiators.
The talks began almost on the anniversary of June 23rd's EU Referendum, where the UK first voted to separate from the EU. The news initially boosted Sterling, as both David Davis from the UK and Michel Barnier from the EU made positive statements for their intent during talks.
The Pound’s more recent decline comes from other UK news, this time focusing on the Bank of England (BoE). Less than a week after a Pound rally was caused by Kristin Forbes voting for higher UK interest rates, Forbes’ replacement has been announced.
Forbes is due to leave the BoE on July 7th, when Silvana Tenreyro will take over. Compared to the recently pro-hike Forbes, Tenreyro has historically been a more cautious figure.
In particular, economists have highlighted Tenreyro’s desire in 2015 to impose negative interest rates as a way of managing the economy.
As traders digest what this means for the future direction of the BoE, Wednesday is expected to bring the official opening of parliament.
The Pound may appreciate when the government officially starts, as it will at least mean that someone is at the helm to take the UK into Brexit and out of the EU.
The US Dollar’s late-day recovery against the Pound has come from a statement from Federal Reserve President William Dudley.
The Fed Bank of New York President has been optimistic about the future of the US economy, which has raised hopes of a third US interest rate hike in 2017.
Commenting on recent US jobs and inflation data, Dudley said;
‘We’re pretty close to what we think is full employment. Inflation is a little bit lower than what we would like, but we think if the labour market continues to tighten, wages will gradually pick up, and with that, we’ll see inflation get back to 2%.
I’m actually very confident that even though [economic] expansion is relatively long in the tooth, we still have quite a long way to go. This is actually a pretty good place to be’.
This positive outlook follows a US interest rate hike last week, from 1% to 1.25%. This was largely forecast to happen, but concerns surfaced after the event that there could be no further rate hikes in 2017.
A string of further Fed speeches are incoming, which could push the US Dollar higher against the Pound. These will include remarks from Fed officials Charles Evans, Stanley Fischer, Eric Rosengren and Robert Kaplan.
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Source: moneytransfer.co.uk