Currency Rate:

US$/GBP - 1.567

Although the economic calendar is light today, the rest of the week is a busy one for the UK and the risk of volatility for sterling is high if the data surprises. Tomorrow, CPI inflation is expected to jump above 3%. Whilst this is positive, it is widely accepted that this is attributable to higher fuel costs and the 2.5% VAT increase in January. On Wednesday the minutes of the Bank of England’s Monetary Policy Committee are released alongside unemployment data. After the Bank lowered its growth forecasts for the UK in the recent inflation report, the minutes on Tuesday are likely to show a similarly downbeat outlook. The claimant count in the UK is likely to show a marginal improvement. With risk sentiment still driving the market, the risk of sterling dropping is a lot higher this week. If you have any large payments to make in the next few weeks, it might be worthwhile looking at fixing in today’s rate to avoid the market moving against you.

In the USA, the focus will be on the Federal Reserve’s ‘exit strategy’ from monetary stimulus. With a quiet start to the week and the market shut for the President’s day holiday today, the markets await the minutes of the Fed’s monetary policy meeting. Price increases are expected from data on Wednesday and Friday – again attributable to higher energy costs. New building starts are expected to increase and unemployment is expected to show an improvement. Depending on how the market reacts (i.e. whether the US dollar trades on risk sentiment or more ‘normal’ drivers) the above data could see the US dollar move either way. Get in touch today and let us avoid you losing out.

For more information on the US dollar or to request a quote, go to: http://www.smartcurrencyexchange.com/us_dollar_exchange_rate.aspx