Rates steady as US budget deal reached

The US Dollar yesterday hit its cheapest rate for over 2 years against the Pound – which itself continued a slow slide back down against the Euro.

Despite the new US budget deal being reached overnight, the Greenback has been increasingly weak, with GBP-USD hitting its highest rate since April 2011. Wary of another potential government shutdown in January, a cross-party team has managed to produce a budget deal which is expected to pass both houses of Congress and provide funding for another 2 years, while reducing the US debt by $20bn over that period. The deal contains compromises on taxes and spending from both sides but at least the Obama administration should avoid the embarrassment of a repeat of October’s partial shutdown.

Whether the US Dollar will react positively over the coming weeks and we will see exchange rates fall back down as confidence returns to the US economy, remains to be seen.

At home yesterday the UK trade balance was slightly worse than expected, but a NIESR GDP estimate came out above expectations. Sterling remained steady against most currencies and we are still seeing excellent rates for sending money abroad in most cases. There were also warnings that much of the UK is already in another housing bubble.

Today there is little data of note until this evening so a good time to take stock and consider fixing up your own exchange rate. Don’t forget that using Currency Index can save you up to 4% compared to your high street bank; call us for a free quote.