{"id":4440,"date":"2018-03-26T00:00:00","date_gmt":"2018-03-26T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100408-gbp-usd-us-uk-trade-war-fears\/"},"modified":"2018-03-26T00:00:00","modified_gmt":"2018-03-26T04:00:00","slug":"100408-gbp-usd-us-uk-trade-war-fears","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100408-gbp-usd-us-uk-trade-war-fears\/","title":{"rendered":"GBP\/USD: Dollar Drops vs. Pound On Trade War Fears"},"content":{"rendered":"<p>The US dollar traded lower versus the pound on Friday, boosting the pound US dollar exchange rate to a day\u2019s high of $1.4172. The rate then eased back slightly into the close. The pound US dollar rate increased an impressive 1.3% across the previous week, its third straight week of gains.<\/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 improved, after the EU leaders at the EU Summit, on Friday, agreed the terms to the transition deal. The agreement of this deal has laid the foundations to a smoother Brexit deal and is the groundwork for the next phase of the Brexit talks. The deal should give increased clarity to businesses and has given investors increased optimism that the UK could avoid a hard Brexit, which would be most damaging to UK business and the pound.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why is a \u201csoft\u201d Brexit better for sterling than a \u201chard\u201d Brexit? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>A soft Brexit implies anything less than UK\u2019s complete withdrawal from the EU. For example, it could mean the UK retains some form of membership to the European Union single market in exchange for some free movement of people, i.e. immigration. This is considered more positive than a \u201chard\u201d Brexit, which is a full severance from the EU. The reason \u201csoft\u201d is considered more pound-friendly is because the economic impact would be lower. If there is less negative impact on the economy, foreign investors will continue to invest in the UK. As investment requires local currency, this increased demand for the pound then boosts its value. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>The other factor boosting the outlook of the pound is growing optimism that the Bank of England (BoE) will look to raise interest rates in May. The BoE meeting last week ended with a surprise vote split, which showed that two policy makers voted to hike rates immediately. With wages increasing and the economy stabilising, investors consider that the central bank will have more flexibility and a more stable economy on which they could raise interest rates.<\/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>After such a pivotal week last week, this holiday shortened week is set to be much quieter. The UK economic calendar is shot on high impacting data.<\/p>\n<h2><a href=\"#trade-war-fears-still-weigh-on-dollar\" name=\"trade-war-fears-still-weigh-on-dollar\"><\/a>Trade War Fears Still Weigh On Dollar<\/h2>\n<p>The dollar was under pressure for much of the previous week as investors fear a full-on trade war. President Trump announced new trade tariffs to be placed on $50 billion worth of Chinese imports. The Chinese then responded by drawing up a list of 128 US products which will be target should no agreement be reached.<\/p>\n<p>A trade war between the two largest economies in the world could do a significant amount of damage to both economies and is weighing on sentiment for the US dollar. Whilst US economic data was strong at the end of last week, investors remain more concerned over whether these tit for tat responses will end in a large scale trade war.<\/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 US dollar traded lower versus the pound on Friday, boosting the pound US dollar exchange rate to a day\u2019s high of $1.4172. The rate then eased back slightly into the close. The pound US dollar rate increased an impressive 1.3% across the previous week, its third straight week of gains. What do these figures [&hellip;]<\/p>\n","protected":false},"author":163946601,"featured_media":4441,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379,1381],"tags":[1394,1398],"class_list":["post-4440","post","type-post","status-publish","format-standard","has-post-thumbnail","category-gbp","category-usd","tag-gbp","tag-usd"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>GBP\/USD: Dollar Drops vs. Pound On Trade War Fears - 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\/100408-gbp-usd-us-uk-trade-war-fears\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Tarun Gidwani\" \/>\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\\\/100408-gbp-usd-us-uk-trade-war-fears\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100408-gbp-usd-us-uk-trade-war-fears\\\/\"},\"author\":{\"name\":\"Tarun Gidwani\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/cb9d08b81054b1281b909957fd8222cb\"},\"headline\":\"GBP\\\/USD: Dollar Drops vs. Pound On Trade War Fears\",\"datePublished\":\"2018-03-26T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100408-gbp-usd-us-uk-trade-war-fears\\\/\"},\"wordCount\":859,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100408-gbp-usd-us-uk-trade-war-fears\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100408-gbp-usd-us-uk-trade-war-fears.jpg\",\"keywords\":[\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2018\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100408-gbp-usd-us-uk-trade-war-fears\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100408-gbp-usd-us-uk-trade-war-fears\\\/\",\"name\":\"GBP\\\/USD: Dollar Drops vs. Pound On Trade War Fears - 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