Pound Dollar Exchange Rate Under Threat As US/Chinese Trade War Looms

Modified: Sunday, 21 October 2012 19:48 BST - Written by John Cameron

STORY LINK Pound Dollar Exchange Rate Under Threat As US/Chinese Trade War Looms

‘What should go up and doesn’t go up can only come down’, according to the age-old market adage. Investors holding Sterling-denominated assets will be hoping that this tried and tested proverb fails to hold true, following Friday’s session, which saw the release of the latest set of official British public sector borrowing data. The figures revealed that the UK’s public sector borrowing requirement unexpectedly fell from £10.8bn in August to £10.7bn last month; analysts had been anticipating an uptick to £11.7bn, so in relative terms this was a 'good' figure. However, market participants continued to shun the Pound during the remainder of Friday’s session, sending the GBP EUR and GBP USD exchange rates down into the 1.2200s and low-1.6000s respectively.

Elsewhere, global equities markets ended the week with a whimper rather than a bang, with virtually every major exchange giving up ground. North American stocks were particularly hard-hit with the Dow Jones in New York leaking over 1.50% of its value on the day. The broader-based NASDAQ registered losses of an even greater magnitude. The main deriver behind Friday’s ‘risk-off’ trading environment appeared to be the World Trade Organisation’s verdict that Chinese tariffs on the imports of US steel-based products are indeed illegal. The ruling will heighten existing tensions between Beijing and Washington – the last thing the world’s fragile economy needs at a time when it appears so ill-equipped to weather a bitter trade dispute between its two leading economies. The shift out of risk-laden assets favoured the safe-haven US Dollar on the session. If the UK’s FTSE 100 and Europe’s bourses continue this pattern during the early part of today’s session, then there appears a strong chance that GBP USD will settle below the key psychological level of 1.6000 once more.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Daily Currency Updates Dollar Po Forecasts