Sterling had another steady week last week. UK house prices still continue to fall while fuel and food costs continue to rise. Consumer confidence is fragile. Not good. However a lot of bad news has already been factored into sterling's exchange rate against most other currencies. The key is for there to be no more major bad UK news. The Bank of England meet this week and the expectation is that UK interest rates will be kept on hold.
The US$ also had a steady week last week and sits at US$1.965/£1 inter bank. The feeling is that inflation is becoming a greater problem for the Fed and as such US interest rates will need to be increased to help combat inflation. However, any increases in US interest rates are unlikely to happen for a while as the US economy is still in a poor state. Sterling's interest rates are much higher than in the US and as such this is likely to support sterling against the US$.
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