USD/GBP Rate & Comments for 16th August 2010

USD/GBP - 1.555

It was an interesting week last week for sterling after the Bank of England’s quarterly inflation report gave a downbeat assessment of the UK’s prospects over the next two years. After a lot of positive sentiment following the new coalition government and the emergency budget over the last 3 months, the Bank of England’s Monetary Policy Committee put a dampener on things by slashing their growth forecasts and inflation expectations. Sterling suffered against the US dollar as a result and many are expecting sterling to hit $1.55/£1 or lower in the next few weeks. Sterling performed well against the euro after concerns over euro zone sovereign debt hurt the single currency. The big data out this week in the UK is the release of the minutes of the Bank of England’s most recent meeting which, given the tone of the inflation report, could add to sterling’s recent decline. Housing data has shown that house prices dropped by 1.7% in August. This is the largest decline in 8 months, so ensure you don’t miss out by calling in for a live exchange rate.

In the USA, last week saw the Federal Reserve vote to add further funding to boost the economy. As a result, risk aversion came back to the fore and there is strong demand for the safe haven US dollars despite major concerns over the US economy. Now might be a good time to secure prices to stop the market moving further against you as some analysts are predicting a return to the $1.40s. In the meantime, many analysts expect a move to $1.5505/£1 which is a key technical average of the last 200 day’s worth of price movement and an important signal for many. Call in to ensure you don’t miss out.

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