USD/GBP Rate & Comments for 29th September 2010

USD/GBP - 1.586

Sterling fell by over 1% against the euro yesterday after downbeat comments by a key Bank of England policy maker left sterling floundering despite hitting a 7 week high of $1.5896/£1 against the US dollar. In a speech to the Hull Chamber of Commerce, Monetary Policy Committee member Adam Posen said that the central bank should start pumping more money into the economy in order to avoid a prolonged slump of the sort that Japan saw in the 1990’s. The markets were not expecting the negative comments and they contrasted sharply with his colleague Andrew Sentance who stated that the Bank didn’t need to restart the Quantitative Easing programme. Sterling hit a low of 1.1634/£1 and $1.5720/£1 following Posen’s comments despite strong data elsewhere. The UK’s trade deficit showed a stark improvement, jumping from -£9.6bn to -£7.4bn which shows that exports are improving. In addition, a survey by the CBI showed a marked increase in sales volume amongst retailers which was positive. However, this data was surpassed by the panic that the unexpected comments made. Today, we have lending data and consumer confidence figures. Speak to a trader now to stay abreast of the volatility.

In the USA, the US dollar suffered yesterday as concerns remained over further Quantitative Easing by the Federal Reserve. This is expected to be announced at the end of the Fed’s next meeting on November 2-3rd. Gold yet again hit a record high today, and US bond yields followed suit as investor confidence plummeted and investors looked for safer haven assets to invest in. Consumer confidence fell in September after poor business conditions and weak employment figures. This, combined with the fact that house prices fell to within touching distance of multi-year lows in July saw the US dollar drop further. Get in touch now to ensure you take advantage of this volatility.

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