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Posted May 26th, 2009 by Charles Purdy

Weekly US$ rates and comments – week commencing 26th May 2009

Last week was positive week for sterling. Encouraging news regarding UK inflation and words from the Bank of England (BoE) suggesting that the economy is progressing towards the target rate of 2% helped brighten the outlook. There were also suggestions that the $50bn asset purchase plan to stimulate the UK economy may be increased to $75bn which was in some areas seen as a vote of confidence for the actions already taken by the UK government and the BoE. Gordon Brown even drew praise for leading by example in recession-proofing the stalling UK economy. Last Thursday, the US credit agency S&P downgraded the outlook on the UK economy from stable to negative which in turn caused an instant fall in value for sterling, falling approximately 1.4% against the euro and the US$ within minutes. However, sterling rallied back throughout the day and closed the week roughly 1% up on the euro and 4.5% up and the recently impervious US$. Limited economic data this week so we wait to see if sterling can continue to hold its own.

 

The US having kept abnormally strong in these risk-averse times had a terrible week falling across the board as risk-appetite increased across most markets and currently sits at US$1.585/£1 inter bank. There were many contributing factors to the US$’s fall including, a weaker outlook from the FED on GDP contraction and unemployment in 2009, a positive performance on global equity markets which encouraged investors away from the safe-haven assets and speculation that the US may also be downgraded by S&P in their outlook and credit rating. Though this is not necessarily the end to the US$’s days as a safe-haven asset, it is the first time in a long time that the poor US economic data has had a detrimental effect to the US$’s value on the markets.

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Posted May 18th, 2009 by Charles Purdy

Weekly US$ rates and comments – week commencing 18th May 2009

Even though the Bank of England pulled no punches on Wednesday of last week in describing how difficult the next 18 months were going to be and that the UK economy was far from being out of the wood, sterling gained against most currencies during the course of the last week. Sterling gained support from  Continue Reading…

Posted May 11th, 2009 by Charles Purdy

Weekly US$ rates and comments – week commencing 11th May 2009

At the start of last week sterling strengthened marginally against most currencies thanks to the improved confidence in the financial sector and renewed risk-appetite. The Bank of England (BoE) met on Thursday and despite rates being kept on hold at 0.5% as expected, sterling’s recent gains, especially against the €, unwound within just a couple  Continue Reading…

Posted May 5th, 2009 by Charles Purdy

Weekly US$ rates and comments – week commencing 5th May 2009

Last week was a quiet week for economic data or developments and the UK news headlines was instead dominated by events involving the potential swine-flu pandemic rather than the ongoing global recession. There have been some encouraging signs that sterling has now reached and returned from the bottom of its value on the currency markets.  Continue Reading…

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