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Posted May 21st, 2010 by Charles Purdy

USD/GBP Rate & Comments for 21st May 2010

USD/GBP – 1.443

Sterling recovered from yesterday’s 14 month low against the US dollar as investors unwound ‘short’ positions in the pound as fears over European regulation hit investor confidence. German chancellor Angela Merkel’s banned ‘naked short’ selling of national debt – i.e. selling an asset you don’t have, moving the market down and then buying back at a profit. This feels like a very desperate attempt to preserve the euro, and banning naked short selling is not necessarily the best option – a ban on short selling bank shares in 2008 did not prevent those shares tumbling. The UK has suffered since the election as many feel the aggressive spending cuts promised by the government will hurt growth. There are several pieces of data out today. Public sector net borrowing, business investment and mortgage approvals could all cause significant volatility as sentiment towards the UK suffers. The pound has now fallen 11% against the US dollar in the last year – the worst performer of all the major currencies. Call in now for a live price.

In the USA, with a relatively light day on the economic calendar, the US dollar has been trading on sentiment surrounding the Greek crisis. With the short selling ban now in place, the US dollar has dropped as investors close out speculative positions. Yesterday, manufacturing data showed a slight decline which was a little disappointing given previous industrial production data. With the pound still hovering around the 13 month low, there is still scope for it to fall even further. Get in touch now to avoid missing out.

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