USD/GBP Rate & Comments for 11th June 2010

USD/GBP - 1.468

Sterling rose yesterday driven by a stock market rally and the fact that many investors felt that poor sentiment surrounding the UK’s record deficit had already been ‘priced in’ – i.e. the price takes into account the deficit. The pound rose to a high of $1.4667/£1 and hit 1.2147/ £1 against the euro as investors bought back into the pound following poor sentiment earlier in the week over a possible downgrade of the country’s AAA credit rating. The Bank of England kept interest rates on hold for the 15th month running and also kept the Asset Purchase Facility (quantitative easing) on hold at £200bn. This was widely expected, and further settled the markets and helped add to the pound’s strength. In terms of data, there was little out aside from the Bank decision and out today we have manufacturing data which is expected to show a decline. There is however still concerns over the budget on 22nd June which is holding the pound back. Get in touch now to ensure you are set up to deal with any volatility that this causes.

In the USA, a stronger than expected amendment to the trade balance saw investors look elsewhere today. The trade deficit dropped by $0.5bn to -$40.8bn. This saw an increase in risk appetite and meant that the US dollar weakened as investors looked to other currencies. Unemployment data showed that 9,000 more people claimed for unemployment this month over last month, however the unemployment figures were already priced in after last Friday’s poor Non Farm Payroll data. Out today we have retail sales data – get in touch now for a live exchange rate.

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