BOE minutes yesterday revealed that the recent monthly meeting which resulted in a 150bp cut was a unanimous decision; a result that was largely priced into the market meaning little movement in early Sterling crosses. The surprise was that an even larger cut of 200points was considered but discarded, the committee citing that too large a cut could cause Sterling to plummet, increasing the risk of inflation. The marginally more conservative approach of 150bp also gave the MPC more room to loosen policy in the future.
The afternoons US CPI reading recorded its biggest drop in 61 years, falling a massive 1%. This had investors worried about disinflation, leaving the Fed with a new dilemma on the hands. Cable bounced back up above the 1.50’s, a short lived luxury as an afternoon retreat to Dollar and Yen unfolded. US Equity markets reacted particularly negatively to the news, closing to levels not seen since early 2003.
US Housing Starts figures also plummeted, to their lowest levels seen since records began in 1959. FOMC minutes from the October meeting yesterday evening added further to the gloomy situation, the Fed revealing it is expecting further weak data leading up to next month’s rate decision. Fed futures are now pricing in a cut of at least 50 bps at next month’s meeting. US data today should vindicate the Central’s banks comments, with weekly jobless claims and the Philly Fed index due out today.
Retail Sales monthly figures from the UK are also due out today, a topical piece of data considering the carnage unfolding on High Street recently. M & S sparked a mini price war yesterday, while rumours are abound that Woolworths is selling its retail arm for a nominal £1.
|
Indicative Rates |
||
|
|
Sell |
Buy |
|
GBPEUR |
1.1894 |
1.1921 |
|
GBPUSD |
1.4879 |
1.4902 |
|
EURUSD |
1.2493 |
1.2516 |
|
GBPJPY |
141.47 |
142.11 |
|
GBPAUD |
2.3752 |
2.3831 |
|
GBPNZD |
2.7813 |
2.7912 |
|
GBPCAD |
1.8670 |
1.8767 |
|
NZDUSD |
0.5328 |
0.5371 |
|
GBPZAR |
15.81 |
15.86 |
|
USDZAR |
10.60 |
10.68 |
|
GBPPLN |
4.5620 |
4.5714 |
|
EURJPY |
118.75 |
119.38 |
|
Rates are dependent on amount transacted |
||
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Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.
Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.
Other recent articles
- World First on telegraph.co.uk - Monday 17 November 2008
- Bank of England Minutes Due As Market Worries Over Deflation - World First’s Morning Update - 19th September 2008
- Sterling Higher Before Key CPI Reading - World First Morning Update - 18th November 2008
- G20 Proves Disappointing - World First’s Morning Update - 17th November 2008
- G20 Meeting Unlikely To Provide Sterling Support - World First’s Morning Update - 14th November 2008
