USD/GBP Rate & Comments for 17th May 2010

USD/GBP - 1.441

Sterling has hit a 13 month low against the US dollar in early trading this morning and also fell against the euro as house price data for the UK raised concerns over the health of the domestic economy. This is a particular worry as the new government is committed to cutting the deficit, therefore investors are concerned that the UK will experience poor growth as a result. A house price survey showed that UK prices in May rose less than they did in April pointing to a slow down in the housing market recovery. The reason for the fall was an increase in supply causing sellers to reduce their price expectations. The pound hit $1.4253/ £1 – the lowest since March 2009 – and also fell against the euro to hit a low of 1.1640/ £1. There is little other data out today and as a result, the pound is likely to continue to trade on sentiment. Call in now for an updated price as we could break through the $1.40/ £1 barrier soon.

In the USA, with strong demand for the US dollar today following a poor session on Asian stock markets, expect the trend to continue today. US stock futures suggest that the US stock markets will be down by several points later today. This risk aversion is driving demand for the US currency. Following strong industrial data last week, the Empire manufacturing survey is expected to show similar strength. Later in the week we have the minutes from the Fed’s recent interest rate decision, which could point to when the US Federal Reserve is likely to raise interest rates next. Get in touch now, as we have seen the pound fall by 20 cents over the last year. Stop this from continuing to impact your payments by speaking to a trader today.

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