Pound Dollar Exchange Rate (GBPUSD)

British Pound (GBP) in US Dollar (USD) – 1 GBP = 1.4243 USD

The greenback had the better side of the Pound Dollar Exchange Rate (GBPUSD) for the fifth day in a row, and even positive financial news for the British from Greece didn’t help to strengthen sterling.

Pound Dollar Exchange Rate (GBPUSD)

Inflation figures for the UK rose to a 17-month high at 3.7%, however this was followed by a letter from the Bank of England Governor Mervyn King to the new Chancellor of the Exchequer George Osborne, assuring him that the inflation level was just a blip, and it should fall in the near term.

One factor that will definitely play a role in the medium term with relation to the Pound Dollar Exchange Rate (GBPUSD) is that of the incoming coalition government’s spending cuts. The Conservative party, who have a controlling interest in the coalition government, have promised huge amounts of cuts to public spending in an effort to pay down the national deficit.

The question that the Bank of England Governor posed to Osborne was whether the large amount of cuts risks sending the economy back towards slow growth or even worse, recession.

We will monitor the Pound Dollar Exchange Rate (GBPUSD) over the next few days to see if reaction to the developing political situation affects the currency rates.