March 25, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
A largely political budget failed to rattle the financial markets and the Pound was unmoved on the back of the budget- although it did slip against the US Dollar due to other factors.
It was announced that there would be a reduction in the government borrowing requirements but it was not enough to shift sterling especially as no clarity was divulged on how exactly the deficit would be reduced. Sterling did slip against the US Dollar following jittery trading on the downgrade of Portugal and the ongoing back and forth with Greece and the EU which led to USD buying.
This morning the Pound has staged a recovery following much better than expected retail sales data from the UK at +2.1% month on month; currently we sit at 1.4950 on the USD and 1.12 against the euro.
The euro was the big mover in the currency markets yesterday- on the downside.
There is hope of an agreement for Greece in the next couple of days from the EU summit but until this is definitive the euro will be under pressure.
Interestingly the PBOC (Public Bank Of China) have commented that the Greece debt crisis is just the beginning for the Euro zone- not good news for the euro and this could encourage longer term holders of the single currency to start dumping it and thus forcing it lower still.
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Tags: China, euros, eurozone, Gordon dithering Brown, Greece, labour liars, Weak Sterling | 
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March 24, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
Today is finally the pre election budget day which Alistair Darling will unveil to the House of Commons this afternoon.
So what can we expect from Mr Darling today? Will he be specific and open about how the government plan to reduce the deficit by half within 4 years? Very unlikely…today is the last chance saloon for Labour to dance around the realities and focus upon trying to get re-elected.
Expect to see bashing of financial institutions and for Darling to drum home the point that early cuts or the Conservative policy could spin the economy back into recession. One item that would help this argument and sterling is the expectation of the announcement that the government borrowing forecasts are expected to be revised down from the record £178 billion.
Depending on how much it is revised down will be key for sterling. I would expect to see the budget on this basis to be slightly sterling positive as the financial markets do not expect clear plans on reducing the deficit- the post election budget will be much more relevant for this regard.
Today we have seen the euro trip through to an May 2009 low at 1.3340 against the US Dollar. The catalyst was again uncertainty with Greece coupled with news that Fitch has downgraded Portugal’s long term default rating from AA to AA-, with outlook negative.
The Swiss Franc has hit new all time highs against the euro and currently sits in the low 1.42’s. With imminent intervention not likely we could see further CHF gains.
Categories: Uncategorized | Tags: credit crunch, debt consolidation, euros, Gordon dithering Brown, Greece, labour liars, Swiss Franc, Swiss National Bank, UK recession, Wise Money | No Comments »
February 8, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
The Pound has lost ground today as political concerns and the prospect of the Bank of England’s policy meeting later in the week weighed down Sterling.
Two UK opinion polls over the weekend showed a general election, which has to held by June, would result in a hung parliament.
This weighed on sterling since many believe that such a result would lessen the likelihood of the UK getting to grips with its rising budget deficit.
Meanwhile, traders were wary ahead of the result of the Bank of England’s monetary policy committee meeting on Thursday.
By midday in New York, the pound fell 0.9 per cent to £0.8740 against the euro, lost 0.1 per cent to Y144.21 against the yen and fell 0.6 per cent to $1.5902 against the dollar.
Meanwhile, the dollar hit a six-month high on a trade-weighted basis, consolidating sharp gains after US growth figures came in stronger than expected last week.
The figures helped give the dollar an additional boost given that the US currency was already benefiting from increased risk aversion.
Safe haven demand for the dollar was boosted as fears over Greece’s fiscal position and concerns over continued Chinese monetary tightening weighed on risk appetite and global equity markets.
The dollar index, which tracks its progress against a basket of six leading currencies, rose to a high of 79.534, it highest level since July 30. The dollar also rose to a six-month peak of $1.3850 against the euro before paring some its gains to stand down 0.3 per cent at $1.3905 and climbed 0.5 per cent to Y90.77 against the yen.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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January 8, 2010 | Posted by Dr Search- Principal Consultant at the Search Clinic
Both Sterling and the Yen are being seriously undermined by both political and economic concerns and are racing each other towards the edge of the precipice.
On the Japanese political front, the replacement of Fujii by Kan as Finance Minister was not greeted enthusiastically and as mentioned yesterday the Yen took a little dip in value.
The major concern, was that the Japanese bond market might take flight and the ability of the Ministry of Finance to satisfy the country’s massive debt mountain could become compromised.
Added to this, the first official comments from Kan were distinctly Yen negative with him saying he wants the Yen to weaken further (it fell immediately from 91.10 to 91.75) and then adding that many Japanese firms favour the $/Yen rate at 95.00 and that he must work with the Bank of Japan to bring the Yen to appropriate levels.
Beat that lot, sterling …. Well it did try its best.
On the UK political front, the call from the 2 cabinet members for a secret ballot of Labour MPs to establish Gordon Brown’s position as leader of the party was viewed very negatively by the market on the assumption that a leadership battle this close to the election would be the final nail in the coffin for the Labour party but also, might be enough distraction for them to take their eye off the economy.
Following on from this, there is a report in the Times this morning headed up, “Cash-strapped Treasury contemplates shining up gilts” which ponders the possibility that the Government might be forced to offer higher returns on its gilts in an attempt to maintain their investment appeal.
This will obviously have the effect of further increasing the cost of servicing the country’s borrowings from the current forecast of £60 billion per year – and that is just the interest component.
Old Black Eyebrows is seeking to sell a record £225 billion tranche of debt this year at the same time as the Bank of England look to offload the bonds that it acquired via the Asset Purchase Scheme as part of the QE process and against the back-drop of investor concern over the UK’s status as a AAA rated sovereign.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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August 26, 2009 | Posted by Dr Search- Principal Consultant at the Search Clinic
The number of jobless households has jumped to a record of nearly half a million – the highest level since Labour came to power in 1997.
The figures, published by the Office for National Satistics (ONS), are the latest evidence of the heavy toll being taken on households by the recession, and prompt concerns about the potential dire impact of the economic slump upon children, with nearly two million now in workless homes.
The ONS revealed that the number of households including at least one person of working age but without a job has hit 493,000, an increase of 158,000 on a year ago and the highest number since 1997, when the data was first collected.
The rate jumped by 0.8 percentage points from a year earlier to 2.5 per cent.
Remember Stalinist Brown’s lie- the end of boom and bust?
The figures relate solely to households where all people are unemployed; that is, both available for work and actively looking for it.
Where jobless households with “inactive” people are included — housewives or husbands, students, the long-term or temporarily sick — the figure rockets to 3.3 million, a 240,000 increase on last year.
The rate among these households increased by 1.1 percentage points from a year earlier, to 16.9 per cent, the higest rate since 1999 and the largest year-on-year increase since 1997.
The number of children in these wholly workless households stands at about 1.9 million, up 170,000 from a year earlier.
The data comes a week after official figures outlined the grim outlook for young people while overall unemployment currently stands at over 2.4 million.
Data revealed that the number of “Neets” — young people not in education, employment or training — has risen to a record 959,000.
In total, 835,000 18 to 24-year-olds are Neets, up from 730,000 from the same time last year, while the number of unemployed school-leavers aged 16 and 17 who are not studying or training is 124,000.
Analysts have prediced the the total number of Neets could rise to more than one million in the third quarter.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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June 29, 2009 | Posted by Dr Search- Principal Consultant at the Search Clinic
Britain’s national debt will quadruple to peaks only ever seen in the wake of the Second World War unless the labour Government takes drastic steps to address the pensions and ageing crisis, Standard & Poor’s has warned. The ratings agency has calculated privately that the UK’s public sector debt could quadruple from its current level of just over 50pc of economic output to 200pc or above within the next four decades as the cost of servicing public sector pensions, ballooning social security costs and healthcare burdens becomes overwhelming, The Sunday Telegraph has learned.
The warning is doubly sobering since S&P; last month placed Britain’s debt on to “negative outlook” – an explicit signal that it could soon be downgraded.
Although the agency calculated two years ago that the effects of an ageing population, alongside high pensions and healthcare costs could push Britain’s net debt up above 150pc by 2050, it now fears the added cost of the financial crisis means the debt mountain could in fact rival that in 1945, when the cost of fighting a world war pushed debt well beyond 200pc of GDP.
The warning coincides with research showing that the true size of the UK’s unfunded public sector pensions deficit, which needs to be funded through taxpayer’s cash, is now £1,177bn – a staggering £20,000 for every person in the UK.
A study for the highly respected British North American Committee, written by former Bank of England economist Neil Record, finds that the UK shortfall is far more severe than in the US or Canada.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Categories: Uncategorized | Tags: debt consolidation, Gordon dithering Brown, labour liars, UK interest rates, UK recession | No Comments »
June 26, 2009 | Posted by Dr Search- Principal Consultant at the Search Clinic
Hopes that the biggest post war economic slump will soon end have been dashed after the rich world’s leading economic institution slashed its forecasts for economic growth and warned that Britain next year faces the worst deficit in the industrialised world. In a further blow for Alistair Darling, the Organisation for Economic Co-operation and Development also warned that the Government may have to pump more than £130bn extra into the banking system.
Most economic statistics released in recent months have been better than expected, including the CBI’s distributive trades survey yesterday, which was the strongest for a year.
However, the OECD downgraded its forecast for UK growth this year to a contraction of 4.3pc – compared with a previous forecast of -3.7pc.
The cut is significant, since the OECD chose on the other hand to increase its growth forecast for the world’s leading industrialised economies from -4.3pc to -4.1pc. It added that the 30 member OECD would grow by 0.7pc next year, while Britain would stagnate, not growing at all.
The OECD said that not only was Britain’s fiscal position far weaker than its neighbours, following many years of high borrowing by Gordon Brown, the UK was also more vulnerable to a consumer slowdown associated with falling house prices.
The Paris-based institution said the Government’s fiscal deficit next year would climb to 14pc of gross domestic product – higher than anywhere else in the OECD, including Ireland and Iceland. The report urged the Bank of England to keep “the [interest] rate as close to zero as possible up to end 2010.”
It also warned that more taxpayers’ money may have to be poured into the financial system, saying: “further bank losses may well require substantial further capital injections by governments.” It said the UK may have to spend a further 3-9pc of GDP – equivalent to £45bn-£135bn.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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June 19, 2009 | Posted by Dr Search- Principal Consultant at the Search Clinic
Public borrowing hit a record £19.9 billion in May as the recession continues to take its toll, official figures revealed yesterday morning.
May’s borrowing was nearly double the £10.6 billion borrowed in April. Public sector net borrowing for this financial year is now £30.5 billion — more than twice the level seen at the same stage 12 months earlier.
Even though May is traditionally a weaker month for public finances, borrowing over the month is the biggest figure since the Office for National Statistics’ (ONS) records began in 1993.
Public sector net debt reached £774.8 billion last month, equivalent to 54.7 per cent of gross domestic product (GDP), far exceeding Labour’s now defunct fiscal rules which said that debt would never exceed 40 per cent of GDP.
The number of people claiming unemployment benefits has risen by more than 80 per cent over the last year as companies cut jobs in the face of the sharp economic slowdown.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Categories: Uncategorized | Tags: debt consolidation, Gordon dithering Brown, labour liars, UK interest rates, UK recession, unemployment | No Comments »
June 8, 2009 | Posted by Dr Search- Principal Consultant at the Search Clinic
Sterling came under renewed pressure on foreign exchange markets on Monday morning as the Labour Party’s heavy defeat in the European elections intensified pressure on the liar Gordon Brown. The results of the European elections, which look set to see Labour trail in third after the Conservatives and UKIP, sent the Pound down by a cent by lunchtime in London.
It weakened by a cent to $1.5880 as dealers in London – where the majority of currency trading takes place – digested the results. The currency also fell against the euro at about 87p.
Sterling has been on the backfoot since a spate of resignations, and last week’s local election results intensified speculation about whether Mr Brown can survive in Downing Street. Analysts said that the continued uncertainty is giving dealers good reason to dump the pound.
Investors will be particularly worried that a weakened Government will not be able to drive through the measures required to cut the Budget deficit.
Others caution, however, that the pressure on sterling will be tempered by signs that the UK and the US economies are stabilising after the “free-fall” that marked the six months that sandwiched Christmas. Analysts at Barclays reckon that sterling could claw back to $1.70-$1.80 later in the year.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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June 5, 2009 | Posted by Dr Search- Principal Consultant at the Search Clinic
Sterling tumbled against the dollar and the euro today on worsening political instability after James Purnell, the Work and Pensions Secretary, stepped down from the Cabinet.
The pound, which this week hit a seven-month high of $1.67, fell by 1 per cent to $1.6031 as Gordon Brown began an emergency reshuffle after the departure of three Cabinet minister this week. One euro is now worth 88.42p.
Despite the downward trend on sterling, blue-chip stocks were positive, with the FTSE 100 lifted by the mining sector.
The leading index gained 69.29 points, or 1.52 per cent, to 4,456.23 in early trading, with Rio Tinto the strongest riser, up 12 per cent to £30.52, after it walked away from a deal with Chinalco, the Chinese state-owned metals group, that had been unpopular with shareholders. Instead, investors will be able to participate in a $15.2 billion rights issue.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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