The best exchange rate for USD dollar pairs, the GBP/USD and the USD/JPY are worth keeping an eye on.
The GBP/USD pair has fallen to a many-month low, to levels we have not seen since May. This is because inflation in the UK has finally slowed down. CPI data from the UK is also slowing, down to 6.70% this August. This is down from the earlier 6.80% this July. Food prices have gone down considerably and may be the biggest change so far. It climbed down from 14.90% to 13.60%. The increase in fuel prices may have undone this, however, as prices climbed here.
If we look at even more narrow data in the core CPI, there is a drop from 6.90% to 6.20%. Expectations were at 6.80%. This is quite telling for inflation as this specific figure cuts out the more volatile prices for energy and food. So it likely tells a more accurate story on underlying price changes.
This will all then likely have implications for interest rates and the best exchange rate for USD. The BoE is supposed to announce its policies on this soon. On the whole, analysts still have fairly high confidence that it will raise interest rates by 25 pips. Originally they considered this a 90.00% possibility but now they have it at a 70.00% possibility.
Best USD Rate For USD/JPY
The USD/JPY rate is also of interest for the best USD rate. The Fed’s decision soon will likely have a significant impact on this. The pair is currently at a high point for the year. Analysts expect the Fed to hold the interest rates at the level of 5.25% to 5.50%. We have not seen levels this high for 22 years. However, this leaves the possibility that the coming months will see further rate hikes. We will see if this leads investors to buy USD.
Against the dollar, the yen has been having trouble. Japan has had its trade deficit drop once more this August, down to around 930 billion yen. The BoJ is then likely to change its interest rate policy soon into positive territory. The fragility of the yen leaves it in competition against the dollar.
