As we predicted Sterling was put on the rack yesterday as investors banked profits from long positions ahead of the publication of the Government’s Asset Protection plan. With little detail known at the moment uncertainty has seen speculators cut risky positions. GBP was also hurt by the publication of a G7 memo which showed that the Europeans are worried over the state of sterling’s recent decline. we are both each other’s main trading partners and comments such as this only serve to perpetuate fear and serve as an usher to uncertainty in a climate where ‘no sudden movements’ should be a way of life and not just an instruction when dealing with bears; real or financial.

The dollar lapped up the risk in the afternoon session strengthening by over 2c against sterling over the course of the day as haven funds returned from Threadneedle St to Wall St while the Japanese yen continued to break higher against all of it trading partners.

After equity markets rallied after Bernanke’s non-nationalisation assertions to Congress on Wednesday President Obama’s address was a case of ‘was it something i said?’. The Dow 30 slumped in early trade by over 2% at some points before coming back towards the close of play. President Obama’s stimulus plans and bank bailouts are still light on detail which is only adding to an atmosphere of caution; hopefully with the details of the administration’s first budget being publicised in the next 24 hours that caution should turn to cautious optimism.

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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