USD/GBP Rate & Comments for 10th May 2010

USD/GBP - 1.495

After a turbulent week for the pound last week, and the most closely fought election for nearly forty years, we are still in store for a turbulent week on the foreign exchange markets. Sterling recovered marginally from Friday morning’s lows against the US dollar as David Cameron and Nick Clegg discussed the possibility of working together in a Liberal/ Conservative coalition. With discussions taking place over the weekend, the markets are awaiting clarity as to what the outcome will be. However, with both parties clear that a major priority is clearing the deficit, we should see sterling recover on the announcement of any power sharing deal. At the same time, if talks fail, we will see another fall in sentiment towards the pound. Despite political factors taking centre stage this week, there is a lot of fundamental data out too. Today we have the Bank of England’s interest rate decision (postponed from last week following the election). It is widely expected that the Bank will keep rates on hold at 0.5% and keep the emergency funding on hold at £200bn. Also, we have retail sales data for the UK. Call in now to avoid the market moving against you.

In the USA, the US dollar has dropped in early trading this morning following a return in broad appetite for risky assets. The US dollar is down nearly 1% since last week against the pound and is currently trading at $1.4925/ £1. The focus for the week in the USA is the numerous speakers from the Federal Reserve and some fundamental data out towards the end of the week. We have seen incredibly high volatility in the last 2 weeks – call in now to make sure you take advantage of the movements.

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