Leadership challenge adds to the pound's troubles
Published on 12.12.2018 18:10

The US dollar continues to climb against the major currencies in today’s trading session in anticipation of a rate hike from the US Federal Reserve next week and the question on everybody’d mind is will there be any further rate hikes?

Some analysts believe the Fed is coming to the end of their rate hiking cycle which will have negative effects for the greenback as the Market had been expecting at least another 4 rate hikes as we move into next year.

"We think the Fed may be inching closer to a wait-and-watch mode on the outlook for monetary policy," said Manuel Oliveri, from Credit Agrocole

"Even in recent episodes of market selloffs, the dollar hasn't been gaining as much, indicating investors are cautious about pushing the greenback higher." He added.

Volatility in the US dollar is expected later today against the British pound as UK Prime Minister Theresa May faces a leadership challenge that was called by some of her rebel MP’s and threatens ththrow Britain into a state of political turmoil along with the pound.

Whether she lose or wins the challenge, the move won’t do any favors for the British pound because no matter who is in the top job, the likelihood of Britain facing a Hard Brexit is growing by the day which will add more headache for the British currency

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Andrew Masters

Analyst

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