MARKET REPORT FRIDAY 13^TH JUNE 2008

Good Morning,

Sterling was under pressure from the stronger Dollar all week and has moved lower to the mid 1.94 levels from highs earlier of 1.9760. The Euro this week has lost ground to Sterling moving slowly to 1.2650 as the US Dollar gained market support and pushed the Euro lower from 1.58 to the 1.53 level.

Central Banks have given sentiment to the possibility of raising interest rates to stop inflation which has increased globally with higher prices for oil, raw materials and food products.

The economies are faltering in Europe , which will pose an even more difficult decision to make with the prospect of halting inflation but the danger of slipping towards a recession. The Bank of England has the same problem, trying to stem inflation with the possibility of higher interest rates while the confidence in the UK economy is weakening.

The fed has considered that US interest rates at 2% will be enough to revive their flagging economy and if they have to increase rates to ward off inflation they have more room to manoevre than the Bank of England or ECB.

Michael Ince   

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