Foreign Exchange - UK Daily Update - Written by jeremy on Friday, August 21, 2009 7:53 - 0 Comments
World First Foreign Exchange 21 August 2009 Update: Budget Deficit Fears Choke Sterling
It was a mixed day for sterling yesterday as it was dealt a blow by a monthly budget deficit figure straight out of an economic horror story.
The most influential piece of data for the UK yesterday was expected to be retail sales. They came out with consensus but up on a yearly basis however the other release at 9.30 would deal sterling a massive blow. The budget deficit for the month of July was expected at £600mln; instead the figure was £8bln. Think of it as the UK waking up with a splitting headache on a Saturday morning, lying in bed fearful of checking the online banking but then going ahead and doing so. We’ve all done it, but what do we do afterwards? Most of us cut back on expenditure because unlike the government we cannot tax people more nor can we simply print more money; government expenditure will likely fall over the next year while coffers will have to swell through a reversal of the VAT rate cut and possible moves higher in income tax.
The poor figure was down to a shortfall in corporate tax takings given the pressure that has been placed on business in the first 6 months of the year. It will get better.
This weakened sterling back into the 1.15s against the euro and back towards 1.63 against the dollar. We were able to make back some ground against the dollar in the afternoon session as risk appetite built after strong global equity market moves. Initial jobless claims from the US were worse than expected but had little effect on the markets.
Data is light today so keep an eye on equity market moves for clues of how markets will trade.
We will have a special video that you won’t want to miss this evening. If we are not able to publish it tonight it will be definitely be available on Monday morning. Apparently I have had too much time in the office so the powers that be have chosen a more ‘hazardous’ location for me to film!
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Latest Exchange Rates At Time Of Writing |
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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. To view any past or present currency blogs please click on the following link www.worldfirst.com/blog. |
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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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