Foreign Exchange - UK Daily Update - Wednesday, October 15, 2008 6:39 - 0 Comments

Inflation Soars as Recession Looms – World First’s Morning Update -15th October 2008

Inflation in the UK rose to 5.2% yesterday as electricity and gas prices surged. This was the highest reading since 1992 and higher than consensus but is not all bad news. The main driver of CPI in the early part of the year was food price inflation; this constituent has since fallen with fruit, eggs, milk and soft drinks all moving lower. Chocoholics beware however as cocoa prices are rising sharply and may well continue.

As we said on Monday, normally these recent CPI readings would herald a rate hike to bring costs in line however given that inflation is now very much out of the limelight we see no reason to shift our expectations of another 50bps rate cut by the Bank of England in November. CPI will be brought to heel by the slowdown and the continual choking of the High St.

The big news today will be the unemployment figures from the UK. The main difference between the current problems and past slowdown/recessions is the jobs market. Pictures of ’74 and ’92 all have people queuing outside job centres and the like where as we have not experienced that as of yet. Jobs figures today predict that nearly 40k people have been made unemployed in the past month. This figure however is not strictly accurate as it is based on claimant count; I doubt whether Lehman Brothers execs will be scouring the ‘want’ ads for warehouse workers. Other data due today includes German CPI and PPI, Retail Sales and Mortgage Applications from the US.

Indicative Rates
	Sell	Buy
GBPEUR	1.2817	1.2844
GBPUSD	1.7449	1.7475
EURUSD	1.3594	1.3619
GBPJPY	177.82	177.94
GBPAUD	2.4960	2.5018
GBPNZD	2.8209	2.8286
GBPCAD	2.0160	2.0272
NZDUSD	0.6168	0.6219
GBPZAR	15.96	16.01
USDZAR	9.12	9.17
GBPPLN	4.4900	4.5191
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.