Lehman's collapse led confidence in the Dollar to plunge, allowing Sterling to gain, up to 1.7956 against the US Dollar this morning.
Approximately 5000 workers lost their jobs at London's Canary Wharf yesterday due to the Lehman closure. The London FTSE closed down another 100 points and sharp declines in stocks were felt across UK and Asian markets yesterday.
The Bank of England injected £5 billion to shore up markets, in addition to the £35-40 billion the Bank contributes weekly at present, and Darling called for stability amongst the central banks in the wake of the crisis.
US markets are still reeling from the biggest bankruptcy case in history. Within 24 hours on Monday, the collapse of Lehman Brothers forced US stocks into their steepest decline since September 11 2001.
Alone, this news is groundbreaking, but taken in combination with the Merrill Lynch buyout and strife for AIG, and it has the potential to change the landscape of Wall Street significantly.
Potential repercussions include global credit restrictions for consumers and companies, higher unemployment and a weakening dollar due to interest rate cuts. The collapse could prolong the credit crunch for longer than previously thought as chaos in the financial sector filters into every aspect of the economy.
Markets are pricing in the likelihood of a Federal interest rate cut, with the decision due today.
The Euro was down against the Pound, trading at 0.7937 and up against the US Dollar to 1.4253 this morning.
The European Central Bank made 23 billion available for lending yesterday. Trichet echoed Darling's sentiments in his claim. “It is an ongoing process and we have to remain extraordinarily alert" in reference to the liquidity of major banking institutions.
EU inflation data is due this morning.
Oil fell to a 2 year low of $92 a barrel, out of concern that turmoil in Wall Street will reduce demand for the commodity. This makes the cumulative drop since July around $50, which will eventually relieve inflation rates in the UK and Europe.
Please note: All rates are subject to change, for the latest up-to-date rates check our Currency converter
The low-key BoE monetary policy meeting yesterday attracted little attention, even as Chancellor...
|South African Rand||16.875|
|GBP indicative mid-market rate at 12:25. Please call for quote.|