Good afternoon,

Major currency pairs remained relatively unchanged overnight with little impetus from yesterday’s trading session. GBP has managed to hold its own, opening 0.2% up against the EUR to hold ground around the 1.1890 mark. Equally GBP has opened above the 1.2500 barrier against USD, despite rumours of a rate hike by the Federal Reserve later today.

The Federal Reserve will meet this evening to discuss future monetary policy and deliver a public decision on an increase of central interest rates. Analysts have forecasted and priced in a hike of 50 basis points (0.5%) which would bring the US interest rate up to a level of 0.75%. This is still a far cry from the 2%+ levels the markets were used to pre-COVID, but still a move in the right direction for the US economy. Some analysts are speculating on an even larger hike of 0.75% (bringing the US interest rate up to 1%) which if it came to fruition would likely see further volatility across GBP/USD and EUR/USD.

The US dollar has been enjoying a period of increased liquidity over the last two months, with investors moving money from riskier assets such as stocks and bonds pouring funds into the safe-haven over the course of the ongoing Ukraine ordeal. This over purchasing, combined with the poor health of the UK economy has caused a drop of over 5.5% for GBP/USD in the last three weeks.

Unfortunately, little respite is in sight – if you are a UK importer purchasing goods in USD, please reach out to your account manager at WorldFirst to discuss how we can help to manage your currency risk over the coming months.

Have a good day.

James Camp, Senior Relationship Manager. James Camp, SME relationship manager at WorldFirst

Whilst every effort is made to ensure the information published here is accurate, you should confirm the latest exchange rates with WorldFirst prior to making a decision. The information published is general in nature only and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available here.