IMS FX MORNING REPORT for Friday 17th December 2010

Today's Interbank rates -

POUNDS TO US DOLLARS 1.5634
POUNDS TO EUROS 1.1718
POUNDS TO AUSTRALIAN DOLLARS 1.5821

EUROS TO US DOLLARS 1.3342
EUROS TO POUNDS 0.8533
EUROS TO AUSTRALIAN DOLLARS 1.3501

POUND HEADLINES:

• The continuing financial problems in the eurozone pose a
  threat to UK banks, the Bank of England has warned. In its latest
  half-yearly financial stability report, it called for stringent new tests on
  the strength of European lenders.
• The Bank of England is concerned about the continuing
  debt situation in the eurozone - the 16 nations that share the euro -
  because UK banks have substantial investments in may of those countries.
• The pound did take a boost yesterday following UK retail
  sales data rising to 0.3% in November broadly in line with expectations.

EURO HEADLINES:

• The German IFO survey of business sentiment is the pick
  of the day. Following the unexpectedly sharp rise in the headline index last
  month to 109.3, the forecast for December is for a modest pullback to 109.0,
  with both current conditions and expectations components slipping back.
• EU leaders have agreed to set up a permanent mechanism to
  bail out any member state whose debt problems threaten the 16 nation
  eurozone. This year Greece and the Irish republic have received emergency
  bail-outs.
• The IMF has approved a three-year loan of 22.5bn euro's
  for the Republic of Ireland. The Funds form the first part of the IMF's
  contribution to the EU and IMF rescue package totalling 85bn euro's being
  received by the Irish Republic.

US DOLLAR HEADLINES:

• In the US, the Conference Board leading economic
  indicators will provide further evidence of the strength of the recovery.
  Markets are looking for a 1.1% rise in the index in November, the strongest
  monthly rise since March.
• The release will be on the back of a stronger than
  expected Philly Fed survey yesterday which helped push 10-year treasury
  yields to a 7 month high.
• However, it is expected movements may be exaggerated by
  thin volumes and that economic fundamentals, especially low inflation, do
  not support the sharp back-up in yields seen in recent sessions.

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