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Bank of England Opt For A Swift Half

Fri, Nov 6 2009, 08:35 GMT
by Jeremy Cook

World First UK Ltd


All this and more is available on our video blog

All in all the Bank of England decision to raise quantitative easing by an additional £25bn turned out to be a bit of a non-event in sterling terms. £50bn would have seen sterling retreat, nothing would have seen it jump higher so it naturally follows that a £25bn expansion is the most sterling neutral of decision.

One analyst described it as ‘one last heave’ we however believe it’s a gamble on an upwards revaluation of the preliminary GDP figure. Should the recovery continue to stall and the High St has an awful Christmas this bet may not come off.

Sterling hit highs of 1.6620 against the USD and 1.1190 against the euro yesterday. Barring any fun and games with today’s non-farm release or stumble in equity markets we believe that sterling should operate in a range of 1.62 - 1.6740 against the USD and 1.10 -1.1250 against the euro for the next week.

There was more data than just the MPC decision which helped GBP upwards yesterday: industrial and manufacturing production were both higher, validating Monday’s strong PMI release, whilst EU retail sales were poor.

Data is dominated by the Non-Farm Payrolls announcement from the US today. Should we see a better figure than consensus (-175k) we would expect USD to strengthen against its crosses and retreat should the figure come out worse.

Have a great weekend.


Latest Exchange Rates At Time Of Writing

Indicative RatesSellBuy
GBP/EUR1.11561.1184
GBP/USD1.66031.6627
EUR/USD1.4861.4883
GBP/JPY150.17150.48
GBP/AUD1.81341.8162
GBP/NZD2.28772.2922
GBP/CAD1.76621.7698
NZD/USD0.72470.7269
GBP/ZAR12.5512.59
USD/ZAR7.5497.5882
GBP/PLN4.72174.7507
EUR/JPY134.43134.7


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World First UK Ltd  | Regent House, 16-18 Lombard Road, London, SW11 3RB
http://www.worldfirst.com/ | enquiries@worldfirst.com

Legal disclaimer and risk disclosure

Disclaimer: The comments put forward by World First 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” ie for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts.

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