Sterling found itself rattling around in recent trading ranges yesterday with gains made against the USD up to the 1.44 level but losses against euro that saw it trade in the 1.09s for the 1st time in a week.

UK construction PMI provided little further insight into the fate of the building sector and had little impact on the pound. Eurozone PPI fell by less than expected and further solidifies our belief that the ECB will hold rates at 2% on Thursday.

Alistair Darling once again spoke of his plan to create a ‘bad bank’ yesterday. This would provide liquidity to High St banks and allow them to shift toxic debt off of their balance sheets. A similar plan is off course part of the US stimulus package. The stimulus plan is startling to resemble a Christmas tree in that so many amendments and bills are being piled on that the danger is, in reaching to put the star on top, the bill may collapse. The latest is a plan to allow US companies an 80% tax cut on foreign earnings. This would strengthen the greenback as dollars would be repatriated in force to strengthen balance sheets. Initial figures put the benefits at 1000bln USD. A strong vote by senators could see EUR/USD and GBP/USD hammer lower.

As it is the first Wednesday of the month we have a big day of data including ADP employment change, Eurozone retail sales and services PMI from the UK.

All this and more is available on the World First Video Blog, check it out at 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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