USD/GBP Rate & Comments for 15th June 2010

USD/GBP - 1.475

Sterling rose over 1% against the US dollar yesterday to hit $1.4803/ £1. The pound jumped after the newly formed Office for Budget Responsibility forecast that government borrowing would be less than expected. The growth forecasts of the previous government were amended down, but this did not come as a surprise for many, as Alastair Darling’s forecast for 3% growth in 2011 had already been heavily criticised for being too optimistic. In addition, the markets digested the ‘hawkish’ (arguing for interest rate rises) comments of Bank of England member Andrew Sentence and the bank’s chief economist Spencer Dale. Both were quoted in articles in the Sunday papers questioning the level of inflation and the sustainability of current monetary policy. Inflation figures released today are expected to show a small drop to 3.4% (CPI) and 5.0% (RPI). This is above the Bank’s target level of 2.5%, and the comments made fuelled speculation that we might be looking at changes to monetary policy far sooner than expected. Either way, yesterday’s volatility demonstrates why it is so important to speak to a currency trader sooner rather than later. Call in now to ensure you don’t miss out.

In the USA, there was little data out yesterday and the US dollar traded on sentiment alone. Risk appetite increased, as Asian markets strengthened overnight and investors bought in to riskier assets. There is some trade data released today including monthly import prices. Yet again we seem to be going from risk aversion to risk appetite on a daily basis – ensure you buy at the right time by speaking to a trader today.

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