USD/GBP Rate & Comments for 24th June 2010

USD/GBP - 1.495

Sterling hit a 6 week high against the US dollar of $1.4999/£1 after sentiment was given a large boost. Firstly, following the emergency budget on Tuesday, credit rating agency Moody’s stated that the UK will retain the AAA credit rating if it successfully implements Tuesday’s measures. In addition, investors were in for a shock when the Bank of England’s minutes for this month’s meeting on monetary policy showed that one of the Bank members voted for a rise in interest rates – the first time for over 2 years that anyone has voted for a rate hike. With VAT set to rise to 20% and a round of tough spending cuts, the affirmation from Moody’s should ease investor concern over the UK. As a result, the pound saw a welcome boost. However, many analysts said that whilst the rise was justified, there are still genuine concerns over the possibility that the cuts and tax hikes could stifle out growth. As a result, many expect that the pound will not have the momentum to push far past $1.50/ £1 for some time. Get in touch now to take advantage of the best price in 6 weeks.

In the USA, the Federal Reserve kept interest rates on hold. And the language in their statement was slightly more pessimistic than last month, suggesting that an interest rate hike by the end of the year will be less likely. This added to the US dollar’s losses against the pound. Out later today, we have US durable goods orders which are expected to drop marginally for the month. Call in now for a live price.

Exchange rates change every second - call Smart Currency Exchange for a live up-to-the-minute quote. For individual requirements, visit the SmartCurrencyExchange.com website and for companies visit the SmartCurrencyBusiness.com website.

USD/GBP Rate & Comments for 23rd June 2010

USD/GBP - 1.486

Yesterday we had the first budget from the new coalition government. The reality of the budget was very much as expected given the huge hole in the public finances and the need to match income to expenditure. And it is often stated that it is best to get all the bad news over quickly rather than dragging it out and prolonging uncertainty and undue suffering. So the new Chancellor laid out a very clear plan of action stating what was going to be done and how. The financial markets initial reaction has been positive which is important to sterling’s stability in the currency market as we have to remember that lenders to this country have to be convinced that we will be able to service our debt longer term. Sterling has gained against both the euro and the US$. The one unknown is what the effect of the cuts in expenditure, the increased VAT and austerity measures elsewhere in the world will have on growth in the UK economy, but the belief is that we will avoid a double dip recession. So we have taken a small step forward but the level of uncertainty is still high and that is why it is important to get in touch now and minimise the chance of losing out.

The US$ has been trading in a narrow ranger against sterling for the last few days. The major news over the weekend was the Chinese decision to let the Yuan move more freely against the US$. This moving freely is all relative as it will still be very controlled but it does mean that Chinese exports will become more expensive and less competitive and make other countries exports into China cheaper. So the logic being applied is that we will see a rebalancing of the world’s cash flows with China’s trade surpluses reducing.

Exchange rates change every second - call Smart Currency Exchange for a live up-to-the-minute quote. For individual requirements, visit the SmartCurrencyExchange.com website and for companies visit the SmartCurrencyBusiness.com website.