The Bank of England announce their rate decision for February today with the market and World First expecting a 50bps cut, taking the rate to 1%. Needless to say this is another record low for the MPC but is inevitable given the record falls that global growth and output have sustained over the past 6 months. As we said in Monday’s Sterling update “Sterling and Snow Falls” 2^nd February 09 the decision will reflect the figures due to be released on the 11^th in the Bank’s Quarterly Inflation Report which we expect will show inflation to sit below target for a good while.

Sterling enjoyed a great rally higher against most of its crosses yesterday with 3 week highs against the dollar. The ADP employment report showed that 522,000 people lost their jobs in January in the US against 659,000 in December. Given that figures end up seeming abstract in a downturn such as we are experiencing I thought I would put it into some form of context;

More people lost their jobs in the US last month than currently live in Liverpool and in the past 2 months more people lost their jobs in the United States than iPhones were sold in the UK in the past year.

This figure is a good indicator for Non-Farms on Friday, predicting it will be a lot easier after today’s Initial Jobless Claims announcement. The ISM for the non-manufacturing sector in the US rose yesterday which allowed risk appetite to flow, albeit briefly, back into the market and sterling to rise. GBP was also buoyed by UK services PMI which rose for the 2^nd month in a row and while still being contractionary keeps the green shoots of a UK recovery alive.

All this and more is available on the World First Video Blog, check it out at http://uk.youtube.com/user/WorldFirstJC

Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our: Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080. 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.

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