Fri 15th Feb Report

CURRENCY
RATE
EURGBP
Euro - Sterling
0.7369
GBPEUR
Sterling - Euro
1.3261
GBPUSD
Sterling - US Dollar
1.9460
EURUSD
Euro – US Dollar
1.4502
GBPAUD
Sterling - Australian Dollar
2.1490
GBPNZD
Sterling - New Zealand Dollar
2.4710
GBPCAD
Sterling - Canadian Dollar
1.9507
GBPZAR
Sterling - South African Rand
14.7802
EURSEK
Euro - Swedish Krona
9.3252
EURDKK
Euro - Danish Krone
9.9953
EURNOK
Euro - Norwegian Krone
7.9226
GBPSEK
Sterling - Swedish Krona
12.5096
GBPDKK
Sterling - Danish Krone
9.9970
GBPNOK
Sterling - Norwegian Krone
10.6281
GBPJPY
Sterling – Japanese Yen
212.65

INTEREST RATES

UK
Base Lending
5..25
USA
Base Lending
3.00
EUROPE
Base Lending
4.00

Annual Euribor
4.75

Monthly Euribor
4.29

3 Month Euro Libor
4.78

6 Month Euribor
4.79

IRPH
5.56

Latest Market News

Fifth Straight Day of Gains for the British Pound

Over the past five trading days, the British pound has rallied more than 300 pips.

Stronger economic data and a hawkish Quarterly Inflation Report have reduced the chance that the Bank of England will ease interest rates aggressively. With inflation potentially breaching the government’s 3 percent limit, the BoE will be treading very carefully going forward. Unless they believe think that growth will slow materially, they will prefer to space out rate cuts in order to prevent inflation from getting out of hand. They are in the same situation as the Fed was last year where they are juggling persistent inflationary pressures with slowing growth. When data materially worsened and the credit crunch got out of hand, the Federal Reserve was forced to shift their focus away from inflation and onto growth, which was when they began cutting the discount rate and then the Fed funds rate.

Bernanke Talks Down Dollar

The US dollar found itself in troubled waters as Fed Chairman Bernanke told the Senate Committee that the FOMC will continue to target the economic slowdown in the US , and stated that they are ready and willing to make more aggressive rate cuts if more signs of weakness emerge for the economy. Bernanke told the committee that the FOMC has changed course as they pushed inflation targeting policies aside, and "will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks." After the statement, the US dollar choked under pressure and dropped significantly against all of the major currencies with exception of the Canadian dollar.

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