Foreign Currency Exchange

Sterling has fallen against the dollar to its lowest level in more than two years following comments by Britain's finance minister highlighting the UK economy's weakness. Chancellor of the Exchequer Alistair Darling told the Guardian newspaper on Saturday that Britain's economic downturn might turn out to be the worst for 60 years.

The dollar has risen to an eight-month high against a trade-weighted basket of currencies. While many investors had predicted that we would see some form of recovery against it, it is looking increasingly unlikely. "Certainly no one's rushing to buy cable at the moment," said Gerrard Katz, head of North Asia FX trading at Standard Chartered in Hong Kong. "There was a lot of weekend press about how bad the UK economy is at the moment, so that's weighing on the market.

The only ray of hope for those with a keen eye on Cable, though far from sentimental, is that with Hurricane Gustav forcing the evacuation of New Orleans and a number of off-shore oil rigs, it looks likely that in the short term oil prices will regain some of the ground lost recently. This could be negative for the USD and it is possible that the market will spike back in favour of Sterling. If this does occur it is likely that the gains will be short-lived so be sure to stay in regular contact with your account manger who will explain the benefits of Limit orders in this situation.