Currency Rates

US$/GBP – 1.513

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Sterling rose to a 3 week high against the euro breaching the 1.12/ £1 mark for the first time since the 26th February. Sterling fell marginally against the US dollar following Wednesday’s gains, but held firm above $1.52/ £1. Sterling’s strength was in the wake of data released yesterday morning that showed the UK’s public borrowing for February was £2bn less than expected. Despite the UK Government borrowing a February record of £12.361bn, this undershot market expectations of nearly £15bn and the markets now expect the Government to borrow less than was initially targeted in this financial year. This is good news for Chancellor Alastair Darling ahead of next Wednesday’s budget as it shows the UK is performing slightly better than the prevailing negative sentiment suggests. Whilst there is still a poor outlook for sterling over the next few months, some analysts feel that the pound has been ‘oversold’ – i.e. dropped more than it should have – and that many of the risks facing sterling are already reflected in the price. As a result, we could see the pound strengthen against the euro and US dollar – but bear in mind that there is a lot of risk still that the pound could drop over political concerns. Today, the Deputy Governor of the Bank of England speaks in Brussels – get in touch now for a price, as this could bring sterling down.

In the USA, one of the reasons behind the US dollar’s comeback against sterling was the rumours circulating yesterday that the Federal Reserve would raise the discount interest rate (the rate at which banks lend to each other). The Fed did this several weeks ago and prompted high levels of volatility. The Fed declined to comment on the rumour. Aside from this, inflation data showed no change in prices month on month and unemployment figures came in more or less as expected. There is little data out today, however if this weekend is anything like the last few, we are likely to see the latest opinion polls hit the Sunday papers and cause volatility. Get in touch now to take advantage. Have a fantastic weekend!

Call 0808 163 0102 or +44 (0) 207 898 0541 from outside the UKor fill out our quote form: http://www.smartcurrencyexchange.com/quote.aspx