USD/GBP Rate & Comments for 14th June 2010

USD/GBP - 1.466

Sterling fell sharply against the euro and US dollar on Friday afternoon as weak industrial output figures left investors concerned that the UK might slip back into recession. Industrial output was expected to show a rise of 0.4%, but dropped unexpectedly by 0.4%. Manufacturing production also fell. However, in early trading this morning, the pound is up by 0.4% against the US dollar following strong trade in the Asian markets that has spurred risk appetite. We are seeing large swings in volatility based around risk appetite/ aversion – especially in the run up to the emergency budget on the 22nd June. Today sees the release of the first forecast from the newly formed Office of Budget Responsibility. The OBR’s assessment is likely to show that the previous government’s forecast for growth over the next few years were far too ambitious. This will further press the need for fiscal consolidation. Call in now to discuss a strategy going forward.

In the USA, a survey showed that consumer confidence in the USA rose to the highest level since January 2008. Even as the debt crisis in Europe has been scaring investors, US consumers are gaining confidence in the US recovery. The boost in confidence has driven Asian stock markets higher and seen demand for the US dollar fall as investors look to more speculative investments. The next major event is the UK’s emergency budget – call in now to make sure you buy at the right time and don’t lose money.

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