Obama would have fired BP chief

On his third visit in a week to Louisiana, Barack Obama has revealed that if the BP chief worked for him he would have most certainly been sacked. Clumsy comments and general shortfalls by BP’s chief Tony Hayward throughout the six week ordeal have placed Obama under increased pressure to take action. Therefore, these comments come as no surprise.

Pound Sterling – UK Markets

News filtering out of the UK yesterday suggested dark days were ahead as the budget cuts needed to reduce the nation’s deficit would have to be drastic. However, David Cameron has today received strong backing as a survey of 1,001 investors and analysts favoured the new government leader over his German counterpart, Angela Merkel. Cameron’s hard stance on the budget deficit is renewing investor confidence whilst other leaders including Barack Obama fail to inspire. However, on the flip side, comments from ratings agency Fitch placing the spotlight firmly on the state of the UK deficit has pushed the Sterling to near two week lows against the Dollar; at GMT 10:50 the GBP/USD rate stood at 1.44680. The UK’s near perfect AAA rating will once again come under pressure. A downgrade would be a disaster for all and would do little to improve confidence in the economy. As of GMT 10:50 the GBP/EUR rate was still in a historically strong position and stood at 1.21010.

US Dollar – US Markets

The Dollar traded at near four-year highs against the Euro on the back of news that a US economic recovery will outpace that of Europe. The single currency traded as high as 1.1877 per Euro and at GMT 09:30 the USD/EUR rate stood at 0.83670. With interest rates in the US near zero, it has now been suggested that this should be increased to more ‘sustainable’ levels. However, this is unlikely to happen until early 2011. Furthermore, key data on wholesale inventories now points towards 2nd Quarter GDP growth. This follows on from positive news in late May suggesting that the US/GDP rate is on the rise. Current information only helps in affirming this.

Euro – European Markets

The Euro crisis has yet again proved how far the rot has spread. The four Persian Gulf states (Saudi Arabia, Kuwait, Bahrain and Qatar) have been planning to join forces and create a single currency. Earlier in the year, the central governing banks held initial talks as to how the move could be made possible. However, after watching the events in Europe unfold, changes have been put on hold. As the Euro has now dropped over 16% during the fiscal year, money managers have become increasingly wary of the possibility of nations potentially reverting to their old currencies. Only time will tell.

Other Currencies – Highlights

As consumer confidence declined for the third consecutive month and home loan approvals fell, the Australian Dollar dropped further against 14 of its 16 most traded counterparts. If you’re holding onto Australian Dollars at the moment, speak to your currency broker for more information. News coming out of HSBC Plc will not help boost confidence in the currency as they predict a “bumpy and volatile ride” throughout the remainder of the year. As Brazil’s economy continues to increase at its fastest pace in 15 years, traders are becoming even more convinced that the central bank governor, Henrique Meirelles, will continue to control exchange rates. The Real gained against the Dollar yesterday, ending two days of losses against the major currency. For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.