GBP/USD March Currency Update

Old Apr 12th 2010, 12:30 am
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Default GBP/USD March Currency Update

The US Dollar faired favorably last month against Sterling hitting a 10 month high early on in March as political uncertainty saw Sterling sold heavily across the board. This was in a part also a ‘flight to safety’ as markets concerns over Greece’s fiscal difficulties grew. With no dramatic economic indicators......employment numbers, housing starts etc. Sterling regained some of the earlier ground lost and the pair managed to find itself in range between 1.48 and 1.52. The Federal Reserve kept interest rates on hold with a view to stabilize markets and kept it’s language of keeping interest rates low for ‘an extended period’. By keeping interest rates low we could have the USD weaker as a result. The reasons for this are two-fold.

Firstly, it makes the Dollar less attractive to invest in (as lower interest rates = lower returns). Secondly, with it being so cheap to borrow to US Dollars, investors can ‘leverage’ their position to make gains on higher interest rate currencies. This is known as the carry trade. Essentially borrowing US Dollars, then selling them to buy higher interest rate currencies such as the Australian Dollar.

Current Central Bank Rates:

US (Federal Reserve): 0.25%
BOE (Bank of England): 0.50%

GBP/USD Highs & Lows of March:

High: 1.53799
Low: 1.4778

A movement of: 4.07%

Difference this would make on £200k

High: $ 307,598
Low: $ 295,560

A difference of $12,038

All of the information above can be explained clearly by your personalised dealer should you open a trading facility with HIFX. To discuss your requirements in more detail and for a free currency consultation please contact HiFX plc on 01753 859 159 or email [email protected].

Kind regards,

Mark Bodega
Director - HIFX
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