A 50bps cut by the Bank of England’s MPC saw sterling rally higher as the market rewarded GBP for their proactive approach. The pound moved to 3 week highs against the USD and near 2 month highs against the European single currency. Positive equity market moves also allowed risk appetite to increase over the course of the trading session.

The ECB also went with expectations yesterday as it held rates at 2%. It followed the decision with a typically cautious press conference which validated our view that a 50bps cut in March is probable although they were categoric in their assertions that rates in Euroland would never hit 0%.

Initial jobless claims from the US were poor as they hit 26 year highs and all eyes will be focused on today’s Non-Farms number. Investors managed to shrug off a slew of negative corporate data to push equity bourses higher; News International posted a $6.4bln loss while Deutsche Bank announced their first loss since WW2.

Risk remains in the market in the form of the US stimulus package’s progression through the Senate. Any massive roadblocks to the plan or Republican filibusters will see all this risk appetite evaporate and dollar benefit from treasury inflows.

Further analysis of sterling and its prospects are available on our video blog http://uk.youtube.com/user/WorldFirstJC

Have a great 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

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