USD/GBP Rate & Comments for 21st April 2010

USD/GBP - 1.538

Sterling rose yesterday as inflation rose more than expected. Consumer prices rose 3.4% on the year against an expectation of 3.2% and retail prices rose by 4.4% against an expectation of 4.1%. This unexpected jump fuelled speculation that the Bank of England may look to raise interest rates in the fourth quarter. The pound hit a high of $1.543/ £1 and 1.1436/ £1 but was held back from moving any higher by concerns over the election. Unexpected support for the Liberal Democrats has prompted renewed speculation that a hung parliament would leave the next Government with no clear majority to pass the tough legislation required to clear the UK’s record deficit. Today we have unemployment data and the minutes from the Bank of England’s recent meeting. With sterling seemingly having difficulty in holding above 1.140/ £1 and with the uncertainty of election, it might be worthwhile taking advantage of prices at that level. Call in now for a price.

In the USA, risk appetite returned to the market as tension eased over the indictment of Goldman Sachs for fraud as the bank posted better than expected profits of $3.5bn for the last quarter. This saw US stock markets rally and demand for US bonds falter. As a result, the US dollar dropped against sterling as traders bought in to the UK’s strong data. Out today, there is relatively little data. Call in now for a price as there is potential for a lot of volatility in the run up to the UK election.

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