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Posted September 24th, 2010 by Charles Purdy

USD/GBP Rate & Comments for 24th September 2010

USD/GBP – 1.566

Sterling rose against the euro yesterday as Euro zone data came in worse than expected and cast doubts over the validity of the region’s recovery. European Purchasing Manager’s data (which shows how much companies are buying) came in far worse than expected causing concerns that the business outlook for the region is looking poor. Sterling rose to 1.1799/£1 on the news and left Wednesday’s 4 month low behind. However, according to Spencer Dale (chief economist at the Bank of England), the UK faces “substantial headwinds” attributable to government spending cuts and tight lending conditions. This leaves a distinct possibility that the Bank of England will inject further money into the economy to stimulate growth. One question needs to be asked though – is the bank’s negative rhetoric a ploy to keep sterling weak and drive exports and a rebalancing of the UK economy? We shall have to wait and see… There is no data out today, so speak to a trader today to avoid missing out on sentiment based trading.

In the USA, data was mixed yesterday. Initially, the US dollar fell against the Japanese yen as the number of unemployment claims unexpectedly jumped from 453,000 to 465,000. However, later on data was released that showed existing home sales had increased from 3.8m to 4.1m. The US dollar recovered a lot of the ground lost against the euro in the last few days, but with the prospect of further Quantitative Easing looming it is hard to see the US dollar going much further at the moment. Out today, there is new home sales data – speak to a trader now to minimise your losses.

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