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IMS FX DAILY MORNING REPORT - Wednesday 9th February 2011

Today's Interbank rates -

POUNDS TO US DOLLARS 1.6090
POUNDS TO EUROS 1.1790
POUNDS TO AUSTRALIAN DOLLARS 1.5921

EUROS TO US DOLLARS 1.3646
EUROS TO POUNDS 0.8481
EUROS TO AUSTRALIAN DOLLARS 1.3503

POUND HEADLINES:

• The pound slid against most major currencies yesterday following chancellor George Osborne's announcement on an increase in Britain's tax levy on banks which has dented investor sentiment towards the UK. Following this news the pound dropped below 1.18 and 1.61 against the euro and dollar respectively.
• Attention will turn to the rebalancing of the UK economy today as the final external trade figures for 2010 are published. However, against much vaunted hopes at the start of last year for net trade to contribute to economic growth, this was not the case.
• UK total trade balance (GBP/Min) for December in at -4831 missing expectations of -4000.

EURO HEADLINES:

• The Euro is likely to be constrained following comments from ECB president Jean-Claude Trichet last week dampening expectations of a near-term rate hike. The big next focus for the Eurozone will be Germany and France fourth quarter GDP figures due for release on Tuesday next week.
• German exports rose 0.5% in December to round out a year of strong growth, increasing 18.5% in 2010, latest figures have shown.
• German imports fell unexpectedly in December, down 2.3% on November, versus analysts' forecasts for slight growth. Nevertheless, for the whole of 2010, imports rose by 20%, the Federal Statistics Office has said.

US DOLLAR HEADLINES:

• China's rate hike briefly put the skids back under the dollar but a general lack of conviction characterised trading conditions in Asia which is understandable considering the event risk surrounding Fed chairman Bernanke's testimony today.
• The main event for financial markets today is Fed Chairman Bernanke's testimony to the House Budget Committee in the US. Watchers though will primarily be scouring for clues about the developing economic outlook and future monetary policy, as, although a considered discussion about the challenging fiscal backdrop is interesting; the threat
  of any immediate action is minimal.
• The US dollar and Swiss Franc were among the weaker currencies yesterday following an ease of tensions in Egypt which has lead investors away from safe-haven currencies.

If you need to buy, sell or make an international payment today then please call me for a free quote.

Kris Charalambides

FX Broker

kris@imsfx.co.uk

www.imsfx.co.uk

Tel: 0207 183 2790