GBP to USD Exchange Rate Near 7-Month Highs ahead of Key ?Obamacare? Repeal Vote

May 4, 2017 - Written by Ben Hughes

STORY LINK GBP to USD Exchange Rate Near 7-Month Highs ahead of Key ?Obamacare? Repeal Vote

Sterling-supportive news has been the UK services PMI for April. As with manufacturing and construction PMIs this week, the services result has risen instead of falling as forecast.

Elsewhere, new car sales in April plummeted on the year by nearly -20%, though this was attributable to a recent change in vehicle excise duty (VED).

The next high-impact UK data isn’t due until the coming Thursday, when the Bank of England (BoE) will make its May interest rate decision.

Given the current general election climate, the BoE is not expected to change interest rates from 0.25%, nor is it forecast to make any big policy changes. Officials could still remark on recent PMIs, however, and boost the Pound if they are particularly optimistic.

The UK trade balance for March is also due on Thursday. If February’s -3.66bn deficit expands, then the Pound to US Dollar exchange rate could slump.

Recent Federal Reserve comments have been surprisingly hawkish, but this has not been enough to trigger a USD rally.

Fed officials stated that while US growth was currently slow, it was likely to pick up ‘at a moderate pace’ in the near-term.

The week is nearly over, but the US Dollar could still fluctuate wildly on incoming trade and jobs data, along with the result of a vote on ‘Obamacare’.

The March trade balance is forecast to show a deficit expansion today, which could increase current USD GBP losses.

The later vote on the Affordable Care Act may cause dramatic US Dollar movement, regardless of approval or rejection. Having failed to pass the bill in March, the Trump Administration is now trying to get a majority vote to repeal and replace ‘Obamacare’.

This has been a highly divisive Trump policy across the US, and the result could weaken the US Dollar considerably. If officials approve a repeal, the US Dollar may crash due to fears of unaffordable or unbalanced healthcare in the future. If the vote fails, then concerns that Trump will continue to be blocked by opposition in Congress may send confidence in his presidency (and the US Dollar) to a new low.

The last US weekly data will be Friday’s non-farm payrolls and unemployment rate results. Unemployment is forecast to rise from 4.5% to 4.6%, while the number of employed persons is predicted to increase by 185k.
If unemployment rises higher than forecast and the payrolls figure disappoints then a GBP USD rally could take place on such negative news.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Dollar Pound Forecasts