The global economic picture is becoming more and more muddied by the day although yesterday’s acted as a broad risk appetite supplement and allowed GBP to fight back against its recent losses.

The continued bounce in global bourses has weakened the choke hold of fear that has gripped investors over the past week and saw the flow of dollars into secure treasury assets fall off. Although the FTSE finished down yesterday the risky classes of shares (miners for example) did well and allowed sentiment to rise.

For the best part of yesterday GBP was below key technical levels and eyeing up recent lows as something to nest in and around however the overnight trading session has been good to us and allowed the pressure valve a slight turn of relief. Dollar gained heavily yesterday against most assets in early trade as news from China showed a massive 25.7% drop in exports in February as the declines in global demand finally began to show.

Yesterday was also the day when the Bank of England started its plan to ease. The years of WW2 had VE Day and VJ Day; yesterday was QE Day in the UK as the government started to buy assets with its newly printed wonga which may have had a depressing effect on the GBP

Overnight the RBNZ decided to cut rates by 50bps as the global slowdown continues to weigh on their economy. The rate has now fallen by 5.25% in little more than 6 months and Alan Bollard and the rest of RBNZ’s rate setting board will be hoping that the new level of 3% will be stimulatory in the short term.

News out of Eastern Europe was not good either yesterday as Hungary announced that its economy contracted at the fastest rate in the first quarter since 1990.

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.

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