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Posted June 27th, 2011 by Charles Purdy

USD/GBP Rate & Comments for 27th June 2011

US$/GBP – 1.5931
Sterling fell below $1.60 against the US dollar for the first time since April 1 last week and fell below €1.12 against the euro as retail sales figures for the UK fell to the weakest level in a year. As expected, Bank of England policymakers voted 7-2 in favour of no change to policy and to call on further stimulus if UK growth continued to suffer – a move that attracted criticism over the weekend from the Bank of International Settlements over the weekend. The BIS warned that the UK’s ultra-loose monetary policy in the face of inflation at double its target risked creating financial distortions, misallocations and instability. On a more positive note, the ‘Lloyds business barometer’ showed a strong rebound in June and as a result the bank now expects a correlating improvement in UK economic activity in 3-4 months time. Elsewhere this week, we have an array of data so call in now for a live exchange rate to avoid losing out.

In the USA, the US dollar continues to benefit from safe haven flows as investors look for the relative safety of US government bonds in order to reduce exposure to the European debt crisis. Demand for these bonds is so high that investors are essentially lending to the US government for free or even paying a fee to do so. We saw an interesting development over the weekend. Chinese Premier Wen Jiabao stated that China is ready to buy billions of European debt in order to prop up the single currency, which could in turn challenge the US dollar’s status as the world’s reserve currency. Out this week, we have key figures on US personal spending and income which will be under the spotlight. Call in now for a live exchange rate.

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