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USD/GBP US Dollar rallies against Pound Sterling

Published: 11 Dec at 4 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, Canadian Dollar, Australia, USA, Canada,

The ‘Greenback’ has rallied against the Pound and has made its first gain in five days against other peers after investors raised their bets that a budget deal reached between US politicians will increase the likelihood of the Federal Reserve cutting its $85 billion per month monetary easing programme at next week’s policy meeting.

“It certainly does appear that a window of opportunity could be opening up for the Fed to act next week without a sharp market reaction. The only question remaining is as to whether they will avail themselves of it,” said an economist at CMC markets.

Tapering will support the US Dollar as quantitative easing devalues the Buck.

The Pound was weakened after Bank of England policy maker Martin Weale said that there has been a ‘sharp and unexpected decline’ in inflation in the UK since the summer. He went on to say that if data confirms this then the Central Bank’s forward guidance policy will have to be maintained for longer.

Sterling was also weakened as investors said that the UK currency’s recent run of gains was overdone. The currency also retreated against the Euro as a result.

The Canadian Dollar meanwhile pushed higher for a second consecutive day against its US relation and edged away from a four-year low against the Pound after the price of crude oil, Canada’s biggest export increased again.

The Australian Dollar also saw a brief rally as commodity prices improved but resumed its losing ways on heightened expectations that the Fed will taper next week. If tapering does occur then commodity based currencies like the ‘Aussie’ will be affected.
As of Wednesday, 11th December 2013, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.188, GBP USD exchange rate was 1.6377, GBP AUD exchange rate was 1.8104, and GBP CAD exchange rate was 1.7347.
Patrick James About Author: (289 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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