The greenback extended more gains against a basket of other major currencies on Thursday after being one of the top performing currency this week.
Potential March Interest Rate Hike
The US dollar recorded its seven-week high on Thursday after the US Federal Reserve made hawkish comments regarding a nearing interest rate hike which was widely expected by the markets and investors.
According to Fed Governor Lael Brainard, the global economy which is improving along with the recovering US economy is set to give the federal reserve more reason to raise interest rates sooner.
On Wednesday two other fed reserve officials including New York Fed President William Dudley and San Francisco Fed chief John Williams who both gave positive comments on the next interest rate hike.
According to Dudley, the risks to the outlook have started to turn to the upside while Williams commented that the interest rate hike will be taken into “serious consideration” during the upcoming Federal Open Market Committee meeting this coming March 14-15.
This increased market confidence that the US economy is growing stronger enough for an expansionary fiscal policy under the Trump administration. The current chances of an interest rate hike this coming March have increased by 70% as the markets await Fed chairwoman Janet Yellen’s speech this Friday.
As the greenback continues to gain higher against other currencies, the British pound recorded new lows against the US Dollar as it the 1.24 level and has hit as low as 1.22.
Although the greenback was to account for the recent gains as the US Dollar received more demand, it was also driven by the manufacturing PMI data which showed that the economic rate has slowed down from 55.9 to 54.9.
The GBP/USD pair has been inching up and down alternately in February driven by conflicting sentiments from the Trump administration along with the hampered strong economic growth of the United Kingdom shows signs of a slowdown. Mixed economic data also spurred the pair in the past weeks before it followed a downward trend last week and went on for the next six sessions in a row as the Federal Reserve showed positive signs in an interest rate hike and economic data dampened the outlook for the Sterling.