{"id":3990,"date":"2017-10-11T00:00:00","date_gmt":"2017-10-11T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100178-gbp-usd-uk-rate-hike-near\/"},"modified":"2017-10-11T00:00:00","modified_gmt":"2017-10-11T04:00:00","slug":"100178-gbp-usd-uk-rate-hike-near","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100178-gbp-usd-uk-rate-hike-near\/","title":{"rendered":"Pound Rallies Against the Dollar as Chances of a UK Rate Hike Increase"},"content":{"rendered":"<p>Strong economic data from the UK data supported the pound on Tuesday, pushing the pound US dollar exchange rate higher. The exchange rate climbed 0.5%, crossing back over US$1.32 for sterling for the first time in 5 days. This is the second straight session of gains for the pound versus the dollar, after it rallied from US$1.3032 at the beginning of the week.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>\n<p> When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute. <\/p>\n<p> For example, it could be written: <em>1 GBP = 1.28934 USD<\/em> <\/p>\n<p> <em>Here, \u00a31 is equivalent to approximately $1.29. This specifically measures the pound\u2019s worth against the dollar. If the US dollar amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n<p> Or, if you were looking at it the other way around: <em>1 USD = 0.77786 GBP<\/em> <\/p>\n<p> <em>In this example, $1 is equivalent to approximately \u00a30.78. This measures the US dollar\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the dollar.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>The general outlook for the pound remains weak thanks to lingering domestic political issues and concerns over Brexit. However, some good news in the form of UK manufacturing and industrial production data was enough to send sterling higher. The data showed that industrial output grew at 1.8% annually in August, doubling analyst\u2019s forecasts of 0.8%. Meanwhile, manufacturing production output increased at 2.8% smashing forecasts of 1.9%, and hitting its highest level of growth since February. The strong data has increased speculation that the Bank of England will vote to raise interest rates at the next central bank monetary policy meeting in November.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>However, gains in the pound were capped as the International Monetary Fund (IMF) cut its growth forecast for the UK. At the annual meeting of the IMF and the World Bank, the IMF said that the negative effects of Brexit were starting to show through in the UK economy. It expects Brexit to continue weighing on the British economy over the coming years. This would make the UK an exception in an otherwise strengthening global economic outlook. There was no knee-jerk reaction to this prediction from pound investors, however a weaker outlook from the IMF could keep gains in the pound in check.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why does poor economic data drag on a country\u2019s currency? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Slowing economic indicators point to a slowing economy. Weak economies have weaker currencies because institutions look to reduce investments in countries where growth prospects are low and then transfer money to countries with higher growth prospects. These institutions sell out of their investment and the local currency, thus increasing supply of the currency and pushing down the money\u2019s worth. So, when a country or region has poor economic news, the value of the currency tends to fall. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<h2><a href=\"#dollar-traders-await-the-fed-minutes\" name=\"dollar-traders-await-the-fed-minutes\"><\/a>Dollar traders await the Fed minutes<\/h2>\n<p>Overall, the outlook for the dollar is strong. The market is currently pricing in on an 85% probability of a US interest rate hike in December, which is providing support for the buck.<\/p>\n<p>Today, investors will look towards the US Federal Reserve minutes from the policy committee meeting in September. If the minutes show that the Fed still has confidence in the US economy and supports an increase in interest rates, then the dollar could reverse its two-day decline. Given that odds for a rate hike are so high, the risk is to the downside. However, any comments showing hesitation towards raising interest rates could weigh on the dollar heavily versus the pound.<\/p>\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Strong economic data from the UK data supported the pound on Tuesday, pushing the pound US dollar exchange rate higher. The exchange rate climbed 0.5%, crossing back over US$1.32 for sterling for the first time in 5 days. This is the second straight session of gains for the pound versus the dollar, after it rallied [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":3991,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1394,1398],"class_list":{"0":"post-3990","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gbp","8":"category-usd","9":"tag-gbp","10":"tag-usd"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Pound Rallies Against the Dollar as Chances of a UK Rate Hike Increase - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100178-gbp-usd-uk-rate-hike-near\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100178-gbp-usd-uk-rate-hike-near\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100178-gbp-usd-uk-rate-hike-near\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Pound Rallies Against the Dollar as Chances of a UK Rate Hike Increase\",\"datePublished\":\"2017-10-11T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100178-gbp-usd-uk-rate-hike-near\\\/\"},\"wordCount\":854,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100178-gbp-usd-uk-rate-hike-near\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100178-gbp-usd-uk-rate-hike-near.jpg\",\"keywords\":[\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2017\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100178-gbp-usd-uk-rate-hike-near\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100178-gbp-usd-uk-rate-hike-near\\\/\",\"name\":\"Pound Rallies Against the Dollar as Chances of a UK Rate Hike Increase - 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