Foreign Exchange - UK Daily Update - Wednesday, October 8, 2008 7:56 - 0 Comments

Darling Helps Banks As Fear Continues – World First’s Morning Update – 8th October 2008

Banking shares in London were crucified yesterday as the market was awash with rumours of capital injections for major High St banks. This combined with poor industrial production figures had traders running round headless chickens. The mood hurt recent gains made on sterling although recently established resistance levels have held firm.

This morning the UK government has announced details of a rescue plan for the UK banking arena said to be in the region of £50bn. Capital will be made available to banks and building society which will be paid for in preference shares from the institutions. This will hopefully in the short term eliminate depositors’ fears that their savings are at risk. Customers of Icesave are not so lucky however as it seems more than probable that they will have to apply to the FSCS for compensation due to the Icelandic banking meltdown.

The Bank of England starts its 2 day meeting today and although inflation is still way above target we expect a cut. Many commentators, myself included, see this as a logical second step to the government’s announcement this morning. 50bps appears to be the market consensus and we are inclined to agree.

The US Fed Chair, Ben Bernanke, tipped his hat towards rate cuts as well yesterday as he suggested that the FOMC may “need to consider whether the current stance of policy remains appropriate”. We would hope for a 75bps cut at their meeting due for the end of the month.

Nationwide consumer confidence dipped overnight to 50, the lowest reading in 4 years. Other data due today includes European GDP and pending home sales from the US.

Indicative Rates
	Sell	Buy
GBPEUR	1.2847	1.2875
GBPUSD	1.7546	1.7575
EURUSD	1.3640	1.3665
GBPJPY	176.03	176.82
GBPAUD	2.5483	2.5549
GBPNZD	2.8518	2.8569
GBPCAD	1.9300	1.9368
NZDUSD	0.6120	0.6161
GBPZAR	16.12	16.18
USDZAR	9.19	9.23
GBPPLN	4.4601	4.4958
Rates are dependent on amount transacted Please call 0207 801 9080 for a live rate quote

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.