HEXUS.ratewatch: US axes interest rates again

Change rate

Since the lows of last Monday the pound has gained a fair bit of ground against the dollar. From a low of around $1.55 to the pound it stood at over $1.64 just before the announcement of another 0.5 percent cut in US interest rates. After the Fed said what everyone was expecting the dollar appeared to begin to strengthen again.

Intraday USD/GBP exchange rate courtesy of BBC news

The Fed also cut interest rates by 0.5% earlier this month, in a move that was shadowed by a number of other central banks, including our own. There will therefore be strong expectations of a half point rate cut in the UK too.

Anticipation of the rate cut has been one of the factors in the weakening of the dollar against the pound over the past couple of days as lower interest rates can make a currency less attractive to invest in.

Conversely stocks have been rallying on the news. A quick look at our HEXUS.sharewatch table reveals almost universal gains, with the FTSE 100 closing nearly 15 percent up on its value at 9am on Monday.

The big gainer on our list is clearly NVIDIA as it continues to bask in the initial success of its new 9400M notebook integrated graphics chipset. The only company in the red is AMD after it announced it was selling its DTV assets for considerably less than initially hoped.