USD/GBP Rate & Comments for 11th May 2010

USD/GBP - 1.484

Sterling gained against the US dollar throughout most of yesterday, hitting a high of $1.5054/ £1 as speculation over a deal between the Conservatives and Liberal Democrats helped calm market concerns over the political situation in the UK. Despite being up nearly 1.7% against the US dollar, the pound fell in late trading as news of Gordon Brown’s resignation opened the doors for a potential Labour-Lib Dem coalition and left the markets as concerned as they were at the start of the day. Against the euro, the pound was fairly volatile as traders digested the announcement of a 550bn package to help Greece avoid defaulting on its sovereign debt. The announcement initially caused the euro to strengthen, but the pound recovered ground later in the day as the Bank of England kept interest rates on hold and kept the emergency funding level at £200bn. Out later today we have manufacturing and industrial production data for the month. The key market moving data is the continued uncertainty over the election. Call in now for a live exchange rate.

In the USA, Deutsche Bank – the world’s biggest currency trader – said that the US dollar is likely to extend its 12% gain against the euro as Europe needs more than just emergency funding to help strengthen the single currency. Looking at purchasing power parity (the equivalent cost of two identical goods in two different currencies), the bank’s ‘fair value’ exchange rate prediction for the /$ is between the 1.15 - 1.20/ $1 marks. Following yesterday’s bailout the US stock markets surged by nearly 4%. Out today, we have some minor economic data which is unlikely to have any effect. Get in touch now for a price.

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