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The gossip has been rife over the weekend, with most of the attention falling on George Osborne who signalled the treasury’s support of the Independent Commission on Banking. The commission is looking into the benefits of separating the larger UK banks into retail and investment banking companies. This show of support comes after Mervyn King received bitter complaints from Bankers who see his desire to restructure the sector as loaded with potential danger.  King told the Telegraph on Saturday that banking reform had a long way to go, and his strong views place him in the same camp as Clegg and Cable.

The treasury has appointed Ben Broadbent from Goldman Sachs to the MPC, a move which is replacing Andrew Sentance. It could push the anticipated interest rate move further away as Broadbent is less sure that a rise is necessary.

Osborne has also given another hint as to what this month’s budget will hold, this time for motorists. The budget could reveal a reversal in the plans to implement a rise in fuel duty of 1p, above the rate of inflation. However, he also warned that any help the treasury could give would be small due to the pressure on public finances. Oil has continued to be in headlines because of the crisis in Libya, with crude oil prices now at a two-and-a-half year high. In response to probes on the chancellor’s upcoming budget he said it would be ‘pro-growth, pro-enterprise and pro-aspiration’.

David Cameron has not let Osborne do all the talking recently, as he promised British Businesses on Sunday that the Budget on the 23^rd will be the most pro-growth budget the country has seen for a century. Cameron wants to reduce regulatory burdens on businesses in the attempt to encourage an enterprise culture in the UK. In general it is clear that the government are increasing the push to create a feeling of growth as the budget approaches.

Prince Andrew has been given a rough time in the papers over the past few days as he comes under pressure to step down from his role as a trade ambassador for the UK. His links to Jeffrey Epstein are controversial but speaking on Radio 4 this morning Vince Cable reminded the country that his role is voluntary and that he has been positive for UK trade thus far.

Have a wonderful week.

Jeremy’s Trade of the Week

This week’s trade of the week is a simple Vanilla Protection option for a seller of EUR and a buyer of sterling, who wanted to take advantage of the weak pound towards the end of last week and hedged monthly exposures for the next 6 months.

This option gave the client a worst case rate (WCR) of 1.17 and the ability to participate in 100% of favourable movement downwards of the WCR for an upfront premium of 2.25%

If, on expiry, GBP/EUR is above 1.17 the client can buy at 1.17. If, on expiry, GBP/EUR is below 1.17, the client is able to participate in 100% of the movement lower. For full details of this structure please contact one of our options traders on 0207 801 9050.