Currency - GBP / US Dollar

As mentioned in the Euro- Dollar section above, these are turbulent times for the US Dollar. It is the bellwether for the whole global economy; if US consumers are busily buying up the shops, then the demand that pushes back up the supply chain increases production which increases wages which increases demand etc etc. However, US consumers are still struggling to get jobs, are finding the housing market tough, are saving rather than spending and are finding it tougher to borrow so the slowing pace of growth is not a surprise. As this happens, those with large sums to invest rend to seek assets which will guarantee they get their money back even if they won’t get a massive interest rate or dividend and that generally means they buy US Treasury’s (well the US government won’t default on its loans will it) and bonds of the 2nd largest economy in the world, Japan. Now I know that Japan was replaced by China as No2 after this week’s growth data but it is easier to buy Japanese government bonds than Chinese ones and if you buy Chinese assets, you have to use US Dollars to buy them anyway because the Yuan is so restricted. So the net result is that in times of stress, the US Dollar tends to strengthen. That has been the pattern of the last two years in the Sterling - US Dollar exchange rate and although we have seen some correction in that path over the last 4 months, we are still in the same downtrend as I write. Therefore, anywhere near to $1.60 is a great level to be buying US Dollar and anywhere near $1.54 is a great USD selling level.