Sterling under pressure

Fri, 27 Feb 09 06:00 am

Sterling is under pressure this morning over losses in the banking sector. Lloyds is yet to strike a deal with the Treasury over inclusion in the Asset Protection Plan and HBOS has announced over £10 billion worth of write downs for 2008. GDP figures out in the US later today will be a source of interest for markets as growth prospects in the world?s largest economy remain a key driver of economic sentiment and currency exchange rates.

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Record loss for RBS

Thu, 26 Feb 09 06:00 am

The Pound is sitting lower this morning against the Euro and US Dollar after RBS has posted the largest loss in corporate history. The bank which is now 68% taxpayer owned lost £24 billion in 2008. In combination with GDP figures which showed the UK economy contracted -1.5% in the fourth quarter, this news damaged the exchange rate value of Sterling, sending it back to the bottom end of ranges against its international currency partners.

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UK GDP contracts 1.5%

Wed, 25 Feb 09 06:00 am

Figures released this morning show UK GDP contracted 1.5% in the final quarter of 2008. This takes annual growth to -1.9%; a figure largely in line with market expectations. Wall Street gained over 3% yesterday, the largest gain in a month, after comments from Head of the Federal Reserve Ben Bernanke quelled investor fears over the state of the US banking sector.

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Market unease continues

Tue, 24 Feb 09 06:00 am

Wall Street suffered severe losses yesterday as speculation continued that the Federal Reserve will partially nationalise banking giants Citigroup and Bank of America. Nervousness spread to Asian and European equities overnight depressing the Euro and Yen in currency markets.

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Euro continues to fall

Mon, 23 Feb 09 06:00 am

The Euro has suffered its biggest weekly decline against the US Dollar in a month - and the seventh weekly loss out of eight - amid speculation that European Central Bank President Jean-Claude Trichet will today signal that he may cut interest rates to spur growth. The 16-nation currency is currently hovering just over 1.26 against the US Dollar.

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US Dollar declines

Mon, 23 Feb 09 06:00 am

The US Dollar has weakened overnight following reports the US government may nationalise major US banks as a result of the financial crisis. Sterling has staged a minor rally following the publication of retail sales figures for January and EU leaders met over the weekend to discuss economic strategy ahead of the G20 summit in London in April.

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Euro under pressure

Thu, 19 Feb 09 06:00 am

The Pound fell to a two week low against the Dollar yesterday as minutes from the MPC meeting revealed quantitative easing is increasingly likely for the UK. The Euro is under pressure due to concerns over the economic situation in Eastern Europe and the US has passed a $275 billion package to address the crisis in the housing market.

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MPC votes 8-1

Wed, 18 Feb 09 06:00 am

The Sterling-Dollar exchange rate has declined this morning after the release of MPC minutes which showed an 8-1 vote for a 0.5% reduction in the base rate. David Blanchflower was again the dissenting voice within the Bank as he argued the 1% reduction should be taken 'without delay'. Global equities remain bearish as unease surrounds global recovery prospects and this is putting pressure on European and Asian exchange rates.

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Risk aversion dominates

Tue, 17 Feb 09 06:00 am

Risk aversion has returned to global markets following reports that the Japanese economy contracted by 3.3% in the 3 months to December. This was the largest contraction in 35 years and triggered a round of risk aversion which strengthened the Yen and US Dollar at the expense of most other currencies.

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G7 fails to inspire

Mon, 16 Feb 09 06:00 am

Currency exchange rates and equity markets are lower this morning after G7 finance ministers failed to provide concrete plans for economic recovery after their meeting in Italy over the weekend. Issuing a statement that was heavy on rhetoric but light on policy, the leaders have inadvertently added to pressure on the Federal Reserve to produce a rescue package. Confidence and growth prospects remain crucial to global economic sentiment.

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Eurozone GDP down -1.5%

Fri, 13 Feb 09 06:00 am

The Eurozone economy contracted -1.5% in the fourth quarter of 2008, dragging annual growth down to -1.2%. US retail sales figures yesterday showed an unexpected increase by 1% in January, providing a slight boost in risk appetite and allowing the Pound to recover some of the losses made earlier in the week.

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Pound slumps overnight

Thu, 12 Feb 09 06:00 am

The Pound has slumped overnight, under pressure from negative data in the UK and the return of risk aversion internationally. European and US equities remain lacklustre as the Federal Reserve rescue package has undergone "nips and tucks" in the interest of a compromise in the Senate.

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UK unemployment 6.3%

Wed, 11 Feb 09 06:00 am

Sterling has taken a dive against its major currency partners as the UK unemployment rate has risen to 6.3%. Global equities are in negative mode after market reaction to the Federal Reserve rescue package was luke-warm, fuelling gains in the safe haven currencies overnight.

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Retail sales up

Tue, 10 Feb 09 06:00 am

Retail sales figures in the UK are up 1.1% in January despite the grim economic climate. Labour?s School Secretary Ed Balls has claimed the recession is the worst in 100 years and balance of trade figures out this morning reflect reduced domestic consumption and export demand. Global equities remain neutral pending the announcement of the Federal Reserve rescue package.

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Markets await rescue package

Mon, 09 Feb 09 06:00 am

Global equities have continued to gain ground this morning, fuelled by optimism surrounding the pending announcement of the Federal Reserve rescue package. This is despite further negative economic data from the UK and Eurozone and the package is expected to support risk appetite internationally.

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Bank cuts to 1%

Fri, 06 Feb 09 06:00 am

The Bank of England reduced the cost of borrowing yesterday to a new historic low of 1%. This was in line with market expectations and served to strengthen the Pound internationally. The ECB voted to leave rates unchanged at 2% and the Euro is coming under increasing pressure due to the lack of decisive policy action from the ECB.

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Rate decisions due

Thu, 05 Feb 09 06:00 am

Trading is volatile this morning ahead of the Bank of England and ECB interest rate decisions due this afternoon. US unemployment figures have risen by over 500,000 in January alone and shares in Europe's major banks have declined as Swiss Re and Deutsche Bank have reported massive profit losses for 2008.

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Negative growth forecast

Wed, 04 Feb 09 06:00 am

The National Institute of Social and Economic Research (NISER) have predicted a 2.7% contraction for the UK economy in 2009 as the world experiences its worst recession in 60 years. President Obama has responded to criticism of protectionism by reiterating that ‘world trade’ remains a priority in the current financial environment.

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Snow blankets City

Tue, 03 Feb 09 06:00 am

It was a thin day of trading across London yesterday as snow blanketed the city, wreaking havoc with transport networks and forcing 1 in 5 workers to stay at home. The weather placed even more pressure on small business owners already feeling the effects of the credit crunch.

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Snow disrupts UK

Mon, 02 Feb 09 06:00 am

A snowstorm sweeping London is keeping trading thin today as adverse weather conditions disrupt transport routes across the capital. An estimated 20% of people have not made it into work at a cost of billions of Pounds to the UK economy.

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