Pound to Dirham Rate Week Ahead Forecast: Appreciation More Likely
- Written by: Gary Howes
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The pound to dirham exchange rate (GBP/AED) rises to 4.9419, a daily gain of 0.45%, and we forecast a constructive week of trade ahead.
Having reached a peak of 4.9821 last Tuesday, GBP/AED slid back to 4.92 amidst a broader rebound in the dollar.
The move looked to have flipped the currency pair into a more significant downtrend but events in the U.S. over the weekend have arrested the decline.
GBP/AED tracks the GBP/USD higher, a move that is connected to the bigger U.S. dollar selloff triggered by news the U.S. Department of Justice is suing the Federal Reserve, the USA's central bank.
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U.S. Federal Reserve Chairman Jerome Powell said the move was part of the Administration's prolonged efforts to capture Fed policymaking. Markets agree: a selloff in stocks, U.S. bonds and the dollar bear testament to nervousness over the future of Fed independence.
President Donald Trump has pressured Powell to lower interest rates since he took office for a second term, and part of that pressure involved threats of legal action over the cost of the refurbishment of the Fed's Washington headquarters.
We thought the matter had died down, and the latest developments have certainly surprised markets.
If the USD selloff has further to run we would anticipate the dirham to come under pressure in sympathy.
GBP/AED looks to have potentially formed a base at 4.92, from where it can try and regain a toehold above 4.96.
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