USD/GBP Rate & Comments for 4th May 2010

USD/GBP - 1.518

Sterling has started the week relatively quietly ahead of Thursday’s general election. The latest polls show the Conservatives in front, but still lacking the required majority to take overall victory. With the prospect of a hung parliament looming, this is seemingly having little effect on the value of sterling and many analysts now feel that a hung parliament has been ‘priced in’ – i.e. already factored into the price. Another view is that a hung parliament might be a good thing for the pound, as stronger cross-party consensus would be needed to tackle the UK’s deficit. However, alternatively, traders might just be waiting to see what happens on Thursday before making a move – wary of placing large trades. Therefore expect a lot of volatility on Friday. Aside from the election, out today we have data on mortgage approvals and consumer credit, neither of which are expected to throw up any major surprises that will affect the pound. Call in now to discuss a strategy to avoid losing out over the election period.

In the USA, following last week’s decision to keep interest rates on hold at the 0%-0.25% target rate, there is a lot of key data out from the US this week. Friday sees non-farm payroll figures which are expected to show an increase of 190,000 jobs for April. In addition, there is manufacturing data and factory orders released today. As has been the trend over the last few weeks, the US dollar price is the risk gauge for sentiment towards the UK. Call in now to avoid missing out.

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