MARKET REPORT 20^TH MARCH 2008

Good Morning,

Yesterday, the Bank of England minutes showed voting was 7-2 in favor of maintaining the Interest Rate at 5.25% in March; the 2 votes were for a 0.25% reduction suggesting that further rate easing is a possibility.

The effects of the tighter credit conditions both in the UK and US featured in the discussions as did concerns about rising commodity prices and inflation worries. Shares in HBOS the UK ’s largest mortgage lender tumbled on rumours that the Bank was experiencing liquidity problems followed by swift denial by HBOS and the Bank of England.

This partly resulted in Sterling losing ground against the Dollar trading as low as the 1.9825 from highs of 2.0140 levels and at 1.2665 against the Euro from highs of 1.2800. This movement, also a correction of short Dollar positions before the long Easter weekend.

This morning, the market was waiting for UK Retail Sales with the market expectation of  0.2% decline but came out as up 1% month on month.

In the US , the Philadelphia Fed Index which represents Business Confidence in the is expecting softer numbers of – 20.0

Mike Ince

Michael Ince
Senior Trader
First Rate FX

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