USD/GBP Rate & Comments for 28th September 2010

USD/GBP - 1.578

Sterling rose against the US dollar to hit a 7 week high of $1.5867/£1 as the US currency struggled to shake off concerns that the Federal Reserve would ease monetary policy further to stimulate the flagging recovery. The movement is clearly more down to US dollar weakness than sterling strength, as sterling’s continued weakness against the euro shows. Sterling continued to languish around the 1.1750 mark against the single currency, as the pound continued to track the euro’s recent strength against the US dollar. UK data didn’t help either, with a survey from property market researcher Hometrack showing that UK house price growth has fallen by 0.4% in September – the lowest rise for 18 months. However, the impact of this was limited, as a flagging housing market has already been priced in to sterling’s value. In terms of data today, the main release is the trade balance figures. Investors are desperate for exports to increase and start driving a ‘rebalancing’ of the economy from debt led growth to export led growth, and this figure will give a good idea of the situation. Additionally, the final GDP figure for the 2nd Quarter is released. This should remain unchanged at 1.2%. Call in now to ensure any unforeseen surprises don’t end up costing you more than they should do.

In the USA, gold hit an all time high of $1,300 per ounce and demand for US treasury bonds shot up. Further US bond auctions later this week are expected to see similarly high demand. The jump in demand for these ‘safe haven’ assets is as a direct result of the market expectation of further easing of US monetary policy by the US Federal Reserve. There was no real US data released yesterday, and today sees US consumer confidence which is expected to drop off marginally on last month. Call in now for a live price.

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