{"id":4036,"date":"2017-10-31T00:00:00","date_gmt":"2017-10-31T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100206-gbp-usd-us-politics\/"},"modified":"2017-10-31T00:00:00","modified_gmt":"2017-10-31T04:00:00","slug":"100206-gbp-usd-us-politics","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100206-gbp-usd-us-politics\/","title":{"rendered":"Pound vs. Dollar Rate Pulled Down by US Politics"},"content":{"rendered":"<p>The pound charged higher against a weaker dollar on Monday, breaking back above US$1.32 for the pound. US political developments were mainly to blame for the the softer dollar. Meanwhile, both the US Federal Reserve and the Bank of England (BoE) are due to give their monetary policy decisions on Wednesday and Thursday respectively.<\/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 outlook for the pound remains strong in the near term. Investors continue to place a high probability on the BoE hiking interest rates at the policy meeting on Thursday despite data on Monday showing that growth in consumer credit had slowed. Consumer credit easing should be good news for the central bank, who had been concerned that households were using credit to bridge the gap between rising prices and falling wages in real terms. However, increasing reluctance to use credit can also mean that consumer confidence in the UK economy is falling.<\/p>\n<p>Data today is expected to confirm the decline in confidence towards the UK economy. Analysts are forecasting a decrease in the consumer confidence index again in October. Should the data come in weaker than expected, then the pound could struggle to move much higher.<\/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=\"#politics-weigh-on-the-dollar\" name=\"politics-weigh-on-the-dollar\"><\/a>Politics Weigh on the Dollar<\/h2>\n<p>The mood for the dollar soured on Monday, with 3 political developments mainly responsible for this. Firstly, investors responded to reports that the US house of Representatives is considering introducing Trump\u2019s promised tax cuts over a five-year period. Following this proposed schedule would mean that the US corporate tax rate would hit 20% by 2022, dropping 3% per year from the current 35%.<\/p>\n<p>The dollar had rallied recently on hopes that President Trump\u2019s pro-growth corporate tax cuts would be implemented sooner rather than late. As hopes of the tax cuts were dampened, the value of the dollar declined.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>How would Trump\u2019s policies boost the U.S. dollar? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>A sizeable corporation tax cut would see a flood of money repatriated to the USA which would then create a high demand for the currency and, in turn, increase its value versus other currencies. Infrastructure spending in a country already close to full employment would also push wages higher, leading to more spending and thus boosting inflation. Higher inflation leads to higher interest rates and a higher demand for the currency. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>Secondly, news that 3 former Trump aides have been charged in the Russian probe weighed on the dollar.<\/p>\n<p>Finally, the greenback is also waiting nervously for Trump\u2019s decision on who he will select to replace US Federal Reserve Chair Janet Yellen. Trump has confirmed that he will take the decision before he leaves for his visit to Asia on Friday. Reports are pointing to Jerome Powell being the frontrunner. His policy stance is considered to be close to that of current Chair Janet Yellen.<\/p>\n<p>While there are a few US economic data releases today, none are considered high impacting. Instead, investors will be eagerly looking forward to tomorrow\u2019s Federal Reserve monetary policy decision. Analysts are anticipating that an interest rate hike will remain on hold until next month.<\/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>The pound charged higher against a weaker dollar on Monday, breaking back above US$1.32 for the pound. US political developments were mainly to blame for the the softer dollar. Meanwhile, both the US Federal Reserve and the Bank of England (BoE) are due to give their monetary policy decisions on Wednesday and Thursday respectively. What [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":4037,"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-4036","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 vs. Dollar Rate Pulled Down by US Politics - 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\/100206-gbp-usd-us-politics\/\" \/>\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\\\/100206-gbp-usd-us-politics\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100206-gbp-usd-us-politics\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Pound vs. Dollar Rate Pulled Down by US Politics\",\"datePublished\":\"2017-10-31T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100206-gbp-usd-us-politics\\\/\"},\"wordCount\":874,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100206-gbp-usd-us-politics\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100206-gbp-usd-us-politics.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\\\/100206-gbp-usd-us-politics\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100206-gbp-usd-us-politics\\\/\",\"name\":\"Pound vs. Dollar Rate Pulled Down by US Politics - 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