UK interest rate decision

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IN THE UK

All eyes were on UK interest rate decision yesterday lunchtime, which remained unchanged at 0.5%. The asset purchase also remained unchanged at £200 billion.
The pound hit a high of $1.6438 against the dollar and €1.1552 against the euro. This is the first time for over two months GBPEUR has breached the €1.15 level.
UK is said to miss its forecast 1.7 percent growth, as per the head of the country’s fiscal watchdog. Dire conditions in the UK stock markets force the FTSE to fall 3.5% as equity values tumble and open another 3% lower this morning.

This morning the various UK PPI figures all came in largely as expected, this has made little if any difference to the pound

ELSEWHERE

The European Central Bank keeps interest rates on hold at 1.5 percent, but Jean Claude Trichet signals possible hikes by the end of the year, this bullish attitude to interest rates is helping the ECB lose fans all over the world as it seems cavalier to even suggest raising rates when countries such as Italy and Spain are on the brink of falling to meet their debt expectations.

EURUSD fell further after the beginning of the US session and bottomed at $1.4110. The euro weakened amid risk aversion and following Jean-Claude Trichet’s press conference and fell across the board.
US initial jobless claims fall unexpectedly in a report by the US Labour Department. This was adjusted to 400,000, less than expectations of a rise to 406,000, attention turns to the US Non Farm Payrolls released this afternoon.

Stock Markets posts negative figures all over the world as fears rise of a global recession, not one of the major markets reported a rise – I have attached a Stock Market Summary form St James’s Place.
The RBA slashes its growth forecast for Australia from 3.25% to 2% and this helped to weaken the AUD, GBP has gained nearly 2 cents from yesterday meaning nearly 8 cents this week in gains.
Yesterday’s currency intervention from the SNB and BOJ to reduce the value of the respective currencies seems to have lost momentum, GBPCHF and GBPJPY are both showing declines this morning and both currencies made gains against the USD

DATA TO LOOK OUT FOR

Have a great weekend.

Current Spot Rates (9.30am)
USD EUR AUD CAD CHF DKK NOK HKD SEK ZAR JPY
GBP 1.6270 1.1502 1.5571 1.5966 1.2487 8.5768 8.9689 12.6900 10.62 11.30 127.627
USD 1.4131 0.9399 0.9674 0.7782 5.2236 5.3960 7.80 6.39 6.80 79.891
EUR 0.7012 1.3401 1.3794 1.1096 7.4479 7.6938 11.12 9.12 9.69 113.910

Key Support and Resistance Levels
Support Resistance
GBPUSD 1.5994 1.6119 1.6189 1.6384 1.6509 1.6579
GBPEUR 1.1319 1.1372 1.1450 1.1581 1.1634 1.1712
EURUSD 1.3718 1.1902 1.4000 1.4282 1.4466 1.4564

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