First Fed rate move in seven years?

The importance of an interest rate move cannot be overstated. After all we haven’t been this close to a rate move from the Fed in nearly seven years. We urge anyone with an exposure to the USD to consider their position in advance of Thursday evening’s announcement.

Thursday’s FOMC meeting is arguably the most anticipated global market event of the year so far. Speculation over the timing of an interest rate rise in the U.S. has been rife throughout 2015 and the popular view is that we are finally close to crunch time.

Janet Yellen has confirmed she will raise rates this year, which leaves the Fed with only a handful of opportunities to act. Many participants believe it will be Thursday night and in fact the market is pricing in a 30 percent chance of a hike.

Whichever way the Fed goes, markets will be highly volatile at the end of this week. A rate hike will create massive demand for the Dollar and could push GBP-USD below 1.5000 by Friday morning. No hike would signal Dollar weakness and send GBP-USD back towards its recent highs of 1.5800.