USD/GBP Rate & Comments for 20th August 2010

USD/GBP - 1.552

Sterling recovered yesterday to jump more than a cent yesterday against the US dollar after far stronger than expected retail sales data boosted hopes that the UK economy can maintain positive momentum in the 3rd quarter. There was an expectation that sales would fall last month after World Cup related electronic goods sales tapered off. However, the figures surprised with a 1.1% jump which saw a surge in confidence in sterling. What pleased analysts was that there was no anomalous factors – such as Christmas spending – that could have artificially affected the figure. Public sector borrowing figures were also down and data showed that money supply increased – this is good for growth, as it shows more money is ‘flowing’ through the system, which causes growth. However, mortgage lending figures were poor and so far this morning this has seen investor sentiment drop as concerns grow over the UK’s growth prospects. This sums up the ebb and flow in sentiment over currency. With an absence of any ‘hard’ data today, call in now to ensure you catch the sentiment at the peak.

In the USA, there was two key pieces of economic data released yesterday. Firstly, unemployment claims. After falling to 478,000 last week, the number of new claims for unemployment benefits unexpectedly jumped to 500,000. In addition, a key measure of manufacturing production showed a further than expected decline. As a result of this poor data, there are yet again concerns over the state of the US recovery and as such – the global recovery as a whole. Expect today’s trading to revolve around risk aversion as investors look to avoid unnecessary risks to their investments. Get in touch now for a live price.

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