MARKET REPORT 25^TH MARCH 2008

Good Morning,

Sterling ended last week at 1.28 levels, on a positive note after seeing some large daily swings and opened at the same level this morning.  Despite the unfounded rumours of another UK bank failure sweeping the stock markets, the pound managed to recover its earlier losses and closed almost unchanged on the week. The shortened week ahead is rather scant on the data front, with the German IFO Index leading the European figures on Wednesday, and UK house price data on Friday.  Market expectations are for the Bank of England to wait until May before possibly cutting interest rates to 5%.

There was the first positive news from the US Housing market, with Existing Home sales rising to 5.03m in February, (yet the £ / USD opened at 1.99 levels this morning) with the EUR / USD showing some Dollar strength opening at 1.5550 levels. The US Stock market also rebounded yesterday suggesting that the FED seems to have got their recent monetary policy right.

Michael Ince
Senior Trader
First Rate FX

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