USD/GBP Rate & Comments for 20th May 2010

USD/GBP - 1.437

The new Chancellor of the Exchequer made his first speech yesterday outlining some of his thoughts on how to encourage businesses to the UK rather than driving them away. Key in this was a reduction in corporation tax. All makes sense because without a strong private sector it becomes very difficult to match government expenditure to income. Sterling had a relatively steady day as it continues to trade in narrow ranges against the euro and be on a downward trend against the US$. Against currencies such as the Australian $ and the New Zealand dollar sterling gained ground as risk aversion was on the increase over the Chinese economy. So times continue to be “interesting” and that is why I suggest you call in now so as to avoid unnecessary losses.

Again the US$ is benefitting from risk aversion and continues to strengthen against sterling and the euro. Even the Russians who wanted to diversify their reserves out of the US$ have been increasing their holding of US$’s. So unless there is some dramatic news out of the US it seems that the US$ is in an upward trend against both the euro and sterling for the short to medium term. So I would suggest that if you need to buy some US$’s then sooner rather than later probably makes sense.

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