USD/GBP Rate & Comments for 9th June 2010

USD/GBP - 1.448

Sterling fell 1% yesterday against the euro breaching 1.20/ £1 as credit rating agency Fitch warned over the UK deficit. Fitch – which is one of the agencies responsible for the credit rating of a country’s debt – said that the challenges facing the UK in order to maintain its ‘AAA’ rating were ‘formidable’. The comments caused concern in the markets, and the pound dropped below $1.44/ £1 and slid to 1.1988/ £1. However, many analysts said that the statement offered nothing new, and simply brought the deficit back into the spotlight ahead of the emergency budget on June 22nd. As a result, sterling has recovered some of yesterday’s losses this morning – helped by the FTSE which opened 0.5% higher. Elsewhere, the UK trade deficit has stayed at £7.3bn despite an expected improvement to £7.0bn. Also, retail sales data showed a mild decline in price inflation. With the current volatility, get in touch to ensure that you don’t miss out.

In the USA, the US dollar strengthened again yesterday following the comments from Fitch. Risk aversion is the major driver of sterling/ US dollar prices at the moment and even though yesterday’s comments added nothing new to what the markets already knew about the UK deficit, the comments brought the deficit back into the spotlight. In terms of data, data on economic optimism showed a decline. Out today, there is crude oil inventory data and Fed Chairman Ben Bernanke testifies to the senate. The US dollar has declined slightly this morning, so get in touch with a trader now to ensure you buy at the right time.

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