The pound initially opened last week’s session on stable footing as GBP investors welcomed Scotland’s lifting of its remaining coronavirus restrictions.
The US dollar nosedived on Tuesday following comments from US Treasury Secretary Steven Mnuchin who suggested that the US ‘welcomed’ a weaker dollar, prompting a major sell-off by investors.
However Trump appeared to contradict Mnuchin on Thursday, stating in an interview with CNBC that ‘ultimately I want to see a strong dollar’ - allowing USD to recoup some of its earlier losses.
This respite proved to be short-lived however as Trump’s speech at the World Economic Forum in Davos led to fears of a potential US trade war after he accused other countries of ‘predatory’ trade practices while also vowing to take action.
On top of this, Friday’s US GDP figures came in well below expectations, further pressuring the US dollar as they revealed domestic growth slowed from 3.2% to 2.6% in the fourth quarter.
The US dollar is showing some signs of life at the start of this week’s session. Whether it is able to hold on to these gains will likely be dependent on the Federal Reserve.
All eyes will be on the Fed this week as it holds its first rate decision of the year, with any hint that the bank may be rethinking its plans to implement three rate hikes in 2018 likely to dent the appeal of USD.
Currencies Direct is one of Europe's leading non-bank providers of currency exchange and international payment services. Since we were formed in 1996, we've maintained our focus on providing innovative foreign exchange and international currency transfer services to corporations of all sizes, online sellers and private individuals. We have also expanded our services to provide dynamic and pioneering "business to business" solutions to help companies, tier 2/3 banks and other non-bank financial institutions to process their international payments. Our headquarters are in the City of London (United Kingdom) and we have operations in continental Europe, Africa, Asia, and the United States. Currencies Direct is jointly owned by private equity firms Palamon Capital Partners and Corsair Capital.