·         Euro weakens as market continues to avoid Greece

·         S&P comment on UK banking hurts sterling

·         Bernanke reconfirmed albeit slightly

·         UK consumer confidence rises for first time in 3 months

All this and more is available on our blog. Click here  http://www.worldfirst.com/blog

You know you’re having trouble writing when you have to resort to cliché. You know you’re really stuffed when you resort to the clichés that footballers rely on in their post match interviews; but, put simply, yesterday was ‘a game of two halves’.

Risky assets did well in the morning session after the Fed statement and President Obama’s State of the Union speech. The pound was up, commodities and stocks were also moving higher and it seemed like it was going to be a fairly boring day.

The euro had continued to weaken throughout the morning as, despite constant assurances by PM Papandreou, the market believed the Greeks will need a bailout from the EU. This combined with an uninspiring budget from Portugal has raised fears of this contagion spreading. EUR/USD broke through the key psychological level of 1.40 whilst GBP/EUR crept above the 1.16 level for the first time since august last year.

Traders tend to pray for volatility during quiet periods. Exhortations of “DO SOMETHING!” have been prevalent in trading rooms this year. The financial gods answered the call yesterday.

Ratings agency Standard & Poor’s said yesterday that it no longer classified the UK’s banking sector as ‘stable and low-risk’ and that only when the UK economy starts to grow ‘will the profile of the UK banking industry’. As we have pointed out in the past there is a correlation between the prospects of the global banking sector, let alone that of the UK, with the prospects for sterling. This note caused sterling to shift lower in the afternoon session, losing around 0.8% against a basket of global currencies. As Pimco’s Bill Gross alluded to earlier in the week the UK’s tie to the finance sector is a double-edged sword; profitable and useful in the good times but has acted as a dead weight over the previous 18 months. This story is nothing new however and I remain bullish for both the pound and the UK economy.

The news that Ben Bernanke has been confirmed as Chairman of the Fed for a second term will alleviate some of the doubt that has been swirling through the markets of late but not much. The win was hard fought however as 30 senators, the largest block ever, voted against the confirmation.

Data from the UK gave sterling a push higher overnight as consumer confidence on our fair isle has risen for the first time in 3 months. During the session today we have EU unemployment at 10.00 and GDP from the US at 13.30. Should US GDP come out better than expected we may see a slight sterling recovery against the dollar in the afternoon session.

Have a great weekend.