Friday was a day of profit taking and sideline sitting as market participants preferred not to run positions over a weekend dominated by the G7 meeting, the passing of the Obama stimulus package and arguments over banking bonuses for UK institutions already part nationalised by Gordon Brown’s government.

Apart from a joint statement on the need for action to combat the crisis the G7 meeting was a bit of a damp squib with most commentators looking for substantive action expected from the upcoming G20 meeting in London; a meeting that will be bolstered by the presence of President Obama.

The massive stimulus package was passed with a chorus of Republican dissent over tax cuts being too small and government intrusion being too large. There is no doubt that a bill of this size and of this importance will be the defining moment of Barack Obama’s Presidency and that history will look back on the date and time of the package’s passage as possibly the biggest ‘do or die’ moment in financial history; save my American Express bill of course.

The UK government came under massive pressure over the weekend after Lloyd’s bank shares fell by over 30% in Friday’s trading session. The Lloyd’s/HBOS merger was rushed through with no anti-competition nor suitable due diligence seemingly executed. In a release made Friday HBOS is said to be in danger of losing up to £10bln after writing down massive losses due to credit market volatility. Given that the taxpayer owns near 40% of the banking group this has naturally become a political issue as well as a financial one.

Overnight the CBI has hammered sterling lower with its assertions that the government will need an extra £100bn of funds during the recession to stimulate growth although they are of the belief that the economy will recover in 2009.

There is no real data today as it is President’s day in the US however given the moves over the weekend we doubt whether it will be a quiet day.

Further analysis is of course always available at our video blog 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.

To view any past or present currency blogs please click on the following link www.worldfirst.com/blog

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