Foreign Exchange - UK Daily Update - Written by jeremy on Tuesday, November 25, 2008 7:47 - 0 Comments
Darling Goes All In - World First’s Morning Update - 25th November 2008
You’ve got to know when to hold ‘em, know when to fold ‘em, know when to walk away and when to run. So runs the ‘The Gambler’ by Kenny Rogers; a tune that may be hummed by MPs as Alistair Darling passes them in the halls of Westminster in light of yesterday’s Pre-Budget Report.
The biggest bangs from Darling’s salvo were down to tax increases for both businesses and the individual. A 0.5% hike on NI contributions by both business and individual tax payers will raise around £5 billion and this combined with the increases in income tax bands or the cessation of tax allowances for the rich gave a ‘Robin Hood’ redistributive sound to the announcement. I for one am surprised that he didn’t address Parliament with a stocking over his head and ask for the money in a brown paper bag.
Public borrowing is set to rocket with a forecasted record of £118bn in 09/10 funded by gilts being the centrepiece. This equates to 8% of GDP and smashes Gordon Brown’s so called ‘Golden Rule’ of sustainable investment. The target was 40% of GDP however with this new raft of measures the figure will sit around 57%. An in depth report of how this and other measures within the PBR will affect GBP over the next 12 months will be available later today.
The FTSE jumped by its biggest percentage gain of all time yesterday but we doubt as to whether this was down to what was happening in Westminster. Instead we feel that the good feeling from the Citibank rescue alongside positive sentiment towards President Elect Obama’s choice for Treasury Secretary.
In the world of currencies the Citibank deal diminished risk aversion and allowed for gains against the USD and JPY, with oil also increasing, although markets still remain volatile. With no apparent reason EUR enjoyed a good day against GBP despite the news that German business confidence has fallen to levels not seen since the early 90s with falls for the 6 months forecasted too.
After the fun and games of yesterday it is a relatively quiet data day with preliminary inflation figures from the US being the highlight although consumer confidence at 15.00 could hurt investor sentiment and damage further risk aversion.
|
Indicative Rates |
||
|
|
Sell |
Buy |
|
GBPEUR |
1.1727 |
1.1752 |
|
GBPUSD |
1.5107 |
1.5132 |
|
EURUSD |
1.2867 |
1.2891 |
|
GBPJPY |
145.40 |
146.50 |
|
GBPAUD |
2.3470 |
2.3534 |
|
GBPNZD |
2.7922 |
2.8058 |
|
GBPCAD |
1.8664 |
1.8743 |
|
NZDUSD |
0.5376 |
0.5416 |
|
GBPZAR |
15.22 |
15.26 |
|
USDZAR |
10.05 |
10.10 |
|
GBPPLN |
4.4952 |
4.5383 |
|
EURJPY |
124.42 |
124.51 |
|
Rates are dependent on amount transacted |
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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.
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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.
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