Jul 31, 2019
GBP Trades Lower as the USD Trades Higher
At 11:00 GMT today, the Bank of England is expected to publish its rate decision and economic forecast. As a result, big movement is expected in the British pound (GBP), which is currently trading lower in response to a stronger US dollar (USD) and the upcoming Brexit. With these currency movements, traders can take advantage of a potential ‘scissors effect’ on the GBP/ USD pair.
In other financial news, the Dollar index, which represents the US dollar (USD) value against all major currencies, is trading at its highest level since May 2017. As the USD has strengthened, the EUR/USD pair is trading lower, at around 1.1039, with strong momentum. This marks this currency pair’s lowest level since May 2017. Yesterday, the Federal Reserve released their interest rate decision and this did not disappoint traders. The USD also displayed strong and sharp movements for two main reasons: (1) The Fed announced that rate cuts will not be repeated over and over. This means that money could be kept longer in bank deposits. (2) The USD also strengthened after the Fed stated that the US economy is doing well compared to global growth, which has weakened. The Fed described the US economy as a ‘good house in a bad neighborhood.’