{"id":5574,"date":"2019-06-19T00:00:00","date_gmt":"2019-06-19T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/101025-gbp-usd-fed-rate-decision\/"},"modified":"2019-06-19T00:00:00","modified_gmt":"2019-06-19T04:00:00","slug":"101025-gbp-usd-fed-rate-decision","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/101025-gbp-usd-fed-rate-decision\/","title":{"rendered":"GBP\/USD: Dollar Traders Look To Fed Rate Decision"},"content":{"rendered":"<p>The pound and US dollar were well matched in the previous session. The pair spent much of the day hovering around the break-even level, with the pound gaining only later in the session. The pair closed 0.2% higher at US$1.2566.<\/p>\n<table class=\"table table-bordered\">\n<tr>\n<th><small> What do these figures mean? <\/small><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><small> 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.For example, it could be written:<em>1 GBP = 1.28934 USD<\/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. Or, if you were looking at it the other way around:<em>1 USD = 0.77786 GBP<\/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. <\/small><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Pound traders spent the session looking ahead to the second round of votes for the Conservative party leadership contest. The 6 remaining candidates had to achieve a minimum of 33 vote in order to remain in the contest.<\/p>\n<p>Favourite Boris Johnson won with 126 votes out of a possible 313. Rory Stewart gained support, emerging as the rival with most momentum. He won 37 votes, up from 19 in the previous round. Dominic Raab was the only candidate to fail to achieve the 33 votes required as his party punished him over his plans to shut Parliament to achieve Brexit.<\/p>\n<p>The pound perked up after the results of the second vote as Boris Johnson\u2019s rivals gained. Boris Johnson is still the clear favourite but any signs that he has tougher competition is supporting the pound. This is because it provides optimism to traders that a no deal Brexit could be avoided.<\/p>\n<table class=\"table table-bordered\">\n<tr>\n<th><small> Why is a \u201csoft\u201d Brexit better for sterling than a \u201chard\u201d Brexit? <\/small><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><small> 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. <\/small><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Today pound trades will continue digesting last night\u2019s results as well as look ahead to UK inflation data due for release. Analysts are expecting inflation to have ticked down to 2% from 2.1%. The reading comes just before the Bank of England (BoE) rate announcement tomorrow.<\/p>\n<h2><a href=\"#federal-reserve-in-focus\" id=\"federal-reserve-in-focus\"><\/a>Federal Reserve In Focus<\/h2>\n<p>The dollar was broadly lower in the previous session as investors look towards the Federal Open Market Committee policy announcement. Market participants are not expecting the Federal Reserve to hike interest rates this month. However, owing to weak economic data amid the ongoing US -China trade dispute, market participants are growing increasingly convinced that the Fed will cut interest rates possibly as soon as July, if not in September.<\/p>\n<p>So, whilst analysts are not expecting a rate cut, they expect to see a slight position shift from the Fed as they prepare the markets for a cut. Should the Fed sound more cautious over the health of the US economy and signal towards a rate cut, the dollar could fall further.<\/p>\n<table class=\"table table-bordered\">\n<tr>\n<th><small> Why do interest rate cuts drag on a currency\u2019s value? <\/small><\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><small> 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. Lower interest rate environments tend to offer lower yields. So, if the interest rate or at least the interest rate expectation of a country is relatively lower compared to another, then foreign investors look to pull their capital out and invest elsewhere. Large corporations and investors sell out of local currency to invest elsewhere. More local currency is available as the demand of that currency declines, dragging the value lower. <\/small><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<hr>\n<p><small><\/p>\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 and US dollar were well matched in the previous session. The pair spent much of the day hovering around the break-even level, with the pound gaining only later in the session. The pair closed 0.2% higher at US$1.2566. What do these figures mean? When measuring the value of a pair of currencies, one [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":5575,"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-5574","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 Traders Look To Fed Rate Decision - 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\/101025-gbp-usd-fed-rate-decision\/\" \/>\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\\\/101025-gbp-usd-fed-rate-decision\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101025-gbp-usd-fed-rate-decision\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"GBP\\\/USD: Dollar Traders Look To Fed Rate Decision\",\"datePublished\":\"2019-06-19T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101025-gbp-usd-fed-rate-decision\\\/\"},\"wordCount\":862,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101025-gbp-usd-fed-rate-decision\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100627-gbp-usd-fed-rate-decision.jpg\",\"keywords\":[\"gbp\",\"usd\"],\"articleSection\":[\"GBP\",\"USD\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2019\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101025-gbp-usd-fed-rate-decision\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/101025-gbp-usd-fed-rate-decision\\\/\",\"name\":\"GBP\\\/USD: Dollar Traders Look To Fed Rate Decision - 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