USD/GBP Rate & Comments for 20th January 2012
US$/GBP - 1.5468
Sterling strengthened against the US dollar yesterday tracking gains by the euro against the US currency after strong demand at a Spanish bond auction saw improved risk appetite. Sterling however dropped below €1.20/£1 against the euro as a survey showed that consumer confidence in the UK fell to the lowest level for 7 years, which increased concerns over the fragile recovery and increased the chances that the Bank of England would look to increase Quantitative Easing as early as next month. Lower inflation earlier in the week had added to this viewpoint also so call in now to avoid losing out.
In the USA, the US dollar continues its negative correlation with risk appetite, dropping when markets feel more positive about the debt crisis in Europe. As a general rule of thumb, if there is poor news from Europe, sterling should strengthen against the euro and fall against the US dollar. The opposite is true when there is good news from Europe and a lower likelihood of widescale default. Out today there is home sales data so call in for a live exchange rate.
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