All this and more is available on our video blog at http://uk.youtube.com/user/WorldFirstJC

And with that it’s over. The G20 circus packed up overnight and the question we must ask is what will last longer? Will it be the damage to the RBS branch on Threadneedle St., the concern over the man whose life was lost in the crush of the protest or the $1.1trn dollars pledged by the leaders of the G20? Most of the money will be fed into the IMF and World Bank to allow weakened countries to apply for assistance via ‘special drawing rights’ and the like. Other decisions included greater regulation of the finance industry including hedge funds, the opening up of tax havens and a regulation relating to banker salary and bonus rewards. The conference ended in a quasi-orgasmic session of backslapping with talk of ‘global solutions to global problems’; permeating syllogisms one and all.

We predicted that the biggest wave in currency markets would not caused by those in London and we were right; the ECB stepped up to the plate for that one. Trichet surprised the market by announcing a measly 25bps cut as opposed to the 50bps that 49 of 55 economists surveyed by Bloomberg expected. GBP/EUR had poked its head above 1.10 briefly in the run up to the release however was slapped back like an errant child and spent the rest of the trading session in the early 1.09s. I do not believe that I am overstating that this is ‘make or break’ time for GBP against the single currency; a close above 1.1050 would make the cross a lot more attractive and would set up a fulfilment of our estimated performance by year end. In its absence a lot of downside risks remains however. The ECB haven’t finished cutting rates yet, the 25bps we didn’t get today was immediately priced in for April. The next meeting will be also when we hear about the ‘non-standard measures’ (read QE).

Sterling was supported ably by some bullish data from the housing/construction sector. House prices rose by 0.9% in March according to the Nationwide Building Society, the first rise since October 2007. This is not something to hang your (hard) hat on however as we would be looking for at least 6 consecutive months of positive growth before we could safely say the worst is over. Construction PMI also moved higher with 30.9 being printed against a consensus view of 27.8.

Today is of course the first Friday of the new month which means Non-Farm Payrolls. Following the poor ADP report on Wednesday and the 27 year high on Initial jobless claims released yesterday the unemployment rate is set to hammer up to 8.6% with the change from the previous month expected at -660k. This will test the good sentiment that has flowed through the markets (equity, bond and currency) over the past 48 hrs.

Have a good weekend.

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

You Might Also Want To Read

• World First Foreign Exchange NZD / AUD Update: 9 November 2009
• Mr Economy? The Doctor will see you now
• World First Foreign Exchange 30 November 2009: Market Close Podcast
• Is Pound The Little Engine That Can? - World First’s Morning Update - 16th April 2009
• World First Foreign Exchange 05 January 2010 Update: Politics Hurts Sterling
• World First in: blogs.ft.com/money-matters 4 February 2010
• Sterling Higher On IP, Japanese GDP Helps Risk Profile - World First’s Currency Exchange Morning Update - 11th June 2009
• Sterling gains as risk appetite grows, EU unemployment rises - World First’s Morning Update - 3rd June 2009
• World First Foreign Exchange 21 July 2009 - All good things must come to an end?
• World First in the press: The Times 22 August 2009
• FX Markets Wait For Bail-Out Plan Progress - World First’s Morning FX Update - 25th September 2008
• Friday 30th May
• Profit Takers Take Pound Lower - World First’s Morning Update - 13th January 09
• World First NZD/AUD Weekly Update - 9th June 2008
• World First Foreign Exchange 22 December 2009: Market Close Podcast
• World First Foreign Exchange 18 August 2009 Update: Chinese Dragon Could Turn Panda Bearish
• World First Foreign Exchange Podcast - 9 November 2009
• World First Foreign Exchange 14 August 2009 Update: EU GDP Higher, GBP Starts to Fall Off
• World First Foreign Exchange 30/07/09 Update: All Eyes On China
• World First Foreign Exchange NZD / AUD Update: 17th August 2009
• World First NZD/AUD Weekly Update - 6th April 2009
• World First’s Morning FX Update - 5th August 2008
• World First Foreign Exchange - 3 August 2009 Sterling Update
• World First in A Place in the Sun magazine (July 2008)
• Sterling fights back from S & P rating downgrade - World First’s Morning Update - 22nd May 2009
• World First in Living France magazine (July 2008 issue)
• World First in French magazine (June 2008 issue)
• World First Foreign Exchange 25 November 2009: Market Close Podcast
• World First Foreign Exchange Podcast - 28 September 2009
• World First in: CGA Magazine October/November 2009 Issue
• World First wins Queen’s Award for International Trade
• World First in the press: Sunday Times 20 July
• World First Foreign Exchange 21 September 2009 Update: Sterling Falls To 1.10
• World First on telegraph.co.uk 23 September 2009
• Dollar’s Worst Week In 25 Years - World First’s Morning Update - 23rd March 2009
• World First Foreign Exchange 1 December 2009: Market Close Podcast
• G8 Damp Squib Fails to Influence FX Markets - World First’s Currency Exchange Morning Update - 15th June 2009
• World First Foreign Exchange 20 January 2010: UK inflation Rockets, German Sentiments Wanes
• World First Foreign Exchange 8 September 2009 Update: Labor Day Rest Benefits Risk
• World First Foreign Exchange - 24 July 2009 Update: Rising equities help risky currencies higher
• World First Foreign Exchange Sterling Update - 01 September 2009 - The euro stages a comeback
• Sterling On The Back Foot - World First’s Morning Update - 3rd February 2009
• Foreign Exchange Sterling Update - 27 July 2009 - Never fear, green shoots are here
• World First Foreign Exchange 27 January 2010: It’s Growth Jim, But Not As We Wanted It
• There May Be Trouble Ahead
• World First Foreign Exchange 15 January 2010: ECB Slam Greece, Euro Weakens Massively
• World First Foreign Exchange Sterling Update - 24 August 2009 - Inflation - The devil you know
• World First Foreign Exchange Sterling Update - 17 August 2009 - The Language of Policy
• World First Foreign Exchange 17 December 2009 Update: UK unemployment falls, Fed announce exit strategy
• World First Foreign Exchange 9 December 2009 Update: Greece downgrade as pre budget report looms