USD/GBP Rate & Comments for 8th June 2010

USD/GBP - 1.447

Sterling hit a fresh 18 month high against the euro yesterday and also strengthened against the US dollar. The pound jumped to 1.2176/ £1 as rumours circulated that investors were moving funds from German ‘bunds’ (government bonds) into UK government bonds (also known as ‘gilts’). The move to UK based investments was attributed to fears over the structure of the euro zone as concerns grew even further that the euro will see serious problems over the coming years. Following a poor start to the week due to risk aversion, the pound also rallied against the US dollar as speculation grew that Prudential had not yet finished buying back billions of US dollars worth of sterling following last week’s failed bid to purchase AIG’s Asian insurance arm. The pound jumped 0.6% this morning to hit a high of $1.4560/ £1 before settling above $1.45/£1. David Cameron spoke today about the long road ahead for the UK economy, but there was little in his statement that the markets were not aware of already, as a lot of his ‘revelations’ over incorrect Labour forecasts have been suspected by a number of analysts for many months. Out today, there is consumer confidence data released overnight. Get in touch now for a live exchange rate.

In the USA, after a strong start to the day for the US dollar as investors moved to buy the safe haven currency, the US dollar gave back ground to most currencies with the notable exception being the euro. With a relatively quiet day on the data front, the US dollar became a gauge of risk sentiment again. The general forecast is that the US dollar is set to strengthen against the pound, and once the volatility related to Prudential has worn off, expect the US dollar to continue to strengthen. Out later today there is some economic optimism data. Get in touch now to take advantage of any spikes in the market.

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