USD/GBP Rate & Comments for 5th August 2010

USD/GBP - 1.583

Sterling slipped off Tuesday’s highs as weaker than expected data on the UK services sector highlighted the possibility that the UK economy may struggle to match the better than expected growth posted in the first half of the year. The figure showed that the services sector was still growing, but not at the rate that had been expected. As a result, sterling fell off from the $1.5968/£1 level seen on Tuesday and is now trading around the $1.58/£1 level. House price data helped sterling, showing prices rose by 0.6% and strong earnings data from Lloyds TSB also helped keep the pound afloat. So far today, Barclays has released strong earnings figures, but a drop in Investment Banking profits has concerned investors. Out later today, there is the Bank of England’s interest rate decision for the month – widely expected to remain on hold. In other news, the Chinese government investment fund is rumoured to have sold $558m worth of shares, equating to £351.4m – the exact amount of Liverpool FC’s club debt, sparking rumours that the Chinese government will announce a takeover. Call in now for live exchange rates (and up to date progress on the Liverpool takeover story).

In the USA, data released yesterday was positive. The ADP non-farm payroll (an important precursor to the key government figures released tomorrow) showed that the US economy added 42,000 jobs last month. Purchasing manager data came in better than expected. Today, there is important unemployment data on the number of claims made for unemployment benefits. Get in touch now for a live price, as Non-Farm payroll is released tomorrow and this can cause volatility.

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