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Posted December 10th, 2010 by Charles Purdy

USD/GBP Rate & Comments for 10th December 2010

US$/GBP1.5804

 

Sterling slipped against the US dollar yesterday after worries over the single currency and euro zone debt crisis brought the pound down against a stronger US dollar. There was no reaction from sterling prices as the Bank of England kept interest rates and monetary policy on hold. Whilst this was widely expected, it was a credit rating downgrade in Ireland that dented sterling. Rating agency Fitch downgraded the credit rating of Ireland after they recently secured an 85bn euro bailout. The UK economy relies heavily upon the euro zone as a trading partner and as a result, issues in the region can impact prospects for the UK recovery. Sterling was not helped by details that showed that house prices fell 0.1% in the last month. Out later today, there is production data which could have a significant effect on sterling pricing.
 
In the USA, a larger than expected decline in the number of claims for unemployment helped bolster the view that the economic recovery is gaining traction. The recent extension of tax breaks has left many expecting a growth boost as consumers and businesses spend additional disposable income. However, some analysts feel that this extension is de facto Quantitative Easing and will add to the deficit and cause more pain in the long term. In terms of data, today sees the US trade balance figures which could see some significant volatility – call in now and speak to one of the team to protect yourself.


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