Market Report

Its another day, and another reason for me to be nervous. Nothing to do with the world of finance, but being a Tottenham fan every game makes me nervous!

Today we see no data from the UK, but from the Euro zone we have the German IFO survey. This has a moderate effect on the markets so there shouldnt be too much to worry about today.

From the US we have Durable Goods orders and the New Homes Sales data released. More importantly tomorrow we have the University of Michigan confidence.

Have a good day.

DE

Sterling strengthened broadly on yesterday as rising stocks led to a dip in risk aversion leading investors back into the carry trade boosting high yielding currencies. Soft manufacturing data did little to dent sterling as stronger stocks globally prompted investors to move back into carry trades where they borrow low yielding currencies like the yen to fund investments in higher yielding assets. This benefited the pound which has the highest interest rates in the Group of Seven industrialised nations at 5.75 percent.

British factory orders unexpectedly fell in October as exports weakened at their sharpest rate in a year, a survey from the Confederation of British Industry showed.

Sterling dipped a little following the data but the broader environment of renewed investor appetite for risk ensured sterling remained supported. Bank of England Monetary Policy Committee member Kate Barker said the credit crunch has shifted risks to the British economy to the downside but that inflation pressures remain a concern for British policymakers.

UK rate expectations as measured by sterling overnight index average contracts indicate investors expect the BoE to cut rates a quarter point to 5.50 percent by January next year.

• GBP/EUR 1.4395
• EUR/USD 1.4221
• GBP/USD 2.0474
• EUR/DKK 7.4556
• GBP/AUD 2.2808
• EUR/SEK 9.2030
• GBP/ZAR 13.7001
• EUR/NOK 7.7304

The rates shown below are indicative and are applicable specifically to inter-bank counterparts. For a tailor made quote for your Foreign Exchange requirement please call your Personal Account Manager.

DH

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