Weekly US$ rates and comments - week commencing 6th April 2009

The G20 summit in London last week had been touted during the run-up as perhaps the pivotal moment for the major powers dealing with the global recession and how we all may survive the ensuing fall-out. So far we have learnt as much about the divisions within certain camps at the meeting as we have about the actions and process for moving forward and limiting this damage. Last week  started positively and continued through the week and sterling's value improved to see increases of about 3% against the euro and  5% on the US$. The Bank of England meets this week and is expected to keep UK interest rates on hold. We also have important economic data released here, in Euro land and in the US so it could be a volatile week for exchange rates. . However the week has started positively for sterling and so we wait to see whether this is yet another false dawn for sterling.

 

Despite the American government's refusal to bail-out their failing automotive industry at the start of last week, a renewed sense of risk-appetite partly generated by the enormous bail-out proposals at the G20 summit, weighed on the US$ which currently sits at US$1.494/£1 inter bank. Almost all significant US economic data released last week was published on Friday and turned out largely as expected. However, the multilateral agreement needed on the proposals at the G20 summit will be hard to broker for a nation so keen on keeping the free-market de-regulated and an agreement involving all main world leaders could well be down to President Obama's flexibility at this testing time.