Morning Call

The Chancellor of the Exchequer George Osborne is to announce the UK’s budget to Parliament at 12:30 GMT. This is a key date for the markets as rating agencies have identified its importance for the credit rating and outlook for the UK. Sterling has been under considerable pressure since the start of the year with credit rating agency Moody’s downgrading the UK for the first time since 1978 from the top level of AAA to Aa1. Osborne had continually cited the importance of th…

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The Bank of England’s Monetary Policy Committee (MPC) minutes were released this morning and showed that its members voted 6 to 3 against increasing quantitative easing (QE). The current level of the Asset Purchase Facility (AFP) setup in January 2009, is £375bn, with Governor King and two other voting for an increase of £25bn to a total of £400bn of QE. Following the release of the minutes, Sterling rallied as no other members had voted for an increase of QE from its…

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Bank of England Minutes of the Monetary Policy Committee Meeting 6 and 7 March 2013 (Link) http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1303.pdf The above link is to an external website and Abshire-Smith are unable to accept responsibility for its contents.…

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The situation continues to develop as comments from EU officials and Cypriot politicians fuel market speculation. Sources for many rumours are unclear leading to speculation and confusion as to what the current situation is. The banks remain closed in Cyprus and the final terms (not yet known) are still required to be ratified by a Cypriot government. The Cypriot coalition has only recently taken office and the required majority for a vote might not be met. Market chatter has beg…

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Today’s trading has been fuelled by speculation, rumour with only brief new detaisl. It is clear that the initial announcement on Saturday caught many investors off-guard, however little clarity has emerged since then. As currently stands Cypriot banks will be closed tomorrow (Tuesday) and potentially remain closed on Wednesday and Thursday. The parliamentary vote to ratify the bank deposit haircut has been postponed, to give politician’s time to renegotiate the EU Deal.…

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To the surprise of analysts it was announced over the weekend that as part of the bailout agreement, Cypriot bank deposits would be imposed with a levy, or a so-called tax. The bailout terms are harsh in comparison to many, with the unprecedented terms effecting individual investors directly. The situation is fluid, and the initial terms of the “tax” are rumoured to have changed, with government officials in discussion on how to move forward. Today and tomorrow are now bank holid…

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During the early part of the US session yesterday Sterling was bid in FX space, reversing recent declines. Mervyn King current Governor of the Bank of England had a pre-recorded, exclusive interview with ITV News (British News Channel) however the price action indicates that this could have been leaked. King said that the recovery is finally “in sight,” only a short time after he changed his stance and voted for further quantitative easing. In the interview he said that if you re…

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Bank of England chews over negative interest rate plan - CityAM Sterling has steady following its recent rapid decline, though the cable is currently unable to break the psychological 1.50 level The unemployment rate has remained steady at 5.4 per cent in February as the Australian economy added 71,500 jobs, the biggest monthly gain in 12 years -SMH Bank of England's Bailey warns that UK banks need more capital, this idea is controversial as some believe higher capital…

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NIESR released their forecast for UK growth yesterday afternoon, for the 3 months to February of -0.1%, signalling the likelihood of a triple-dip recession. Worryingly their report details that they expect “output to pass its peak in early 2008 until 2015.” FTSE 100 closed at a new 5-year high as investors shrugged of concerns following poor UK macro data Sterling strengthened throughout the US and Asian sessions, after trading at 2 and half year lows in recent days…

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Dow Jones closed at an all-time record high of 14,254 FTSE 100 touches a post Lehman Brother’s intra-day high 6,342 British manufacturers must not be “blindsided” by the importance of trading with Europe because the “big future for exports” is with emerging markets, according to Jim O’Neill, chairman of Goldman Sachs Asset Management - Daily Telegraph Capital flight from Cyprus has accelerated since eurozone politicians began threatening…

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China's February non-manufacturing PMI like manufacturing, slowed to a 5-month low of 54.5 versus 56.2 in January, reinforcing the view that the recovery in the world’s second largest economy remains modest Bernanke said that premature rate increases would carry a high risk of short-circuiting the recovery The North/South house price split in the UK: According to the latest Hometrack survey, more than three-quarters of postal areas registering price gains are in London…

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European Central Bank President Mario Draghi signaled the bank has no intention of tightening monetary policy anytime soon with inflation projected to “significantly” undershoot its 2 percent target next year - Bloomberg Royal Bank of Scotland (RBS) has reported its fifth annual loss since it was rescued by the government in 2008. Pre-tax loss of £5.16bn includes past conduct charges of £1.1bn for PPI settlements, £700m for interest rate swaps and a £…

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Deputy Governor of the Bank of England Paul Tucker, appearing before the Treasury select committee yesterday mentioned the radical idea of negative interest rates. It seemed more of an idea, rather than the groundwork for future policy, but it highlighted the bank does have other options left to help the economy. The idea is based upon the notion, that banks are currently parking considerable sums on deposit with the central bank for safety, rather than lending to individuals and businesses.…

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There has been speculation for some time that the UK, would lose its coveted AAA credit rating, as the coalition struggles to meet its fiscal targets and growth continues in a “zig zag” fashion as coined by Mervyn King. The downgrade is an embarrassment to the Chancellor George Osborne, as he had said that keeping the top credit rating would be a measure of his and the coalition’s term. This is the first downgrade in the 25 years that Moody’s has been rating debt. Ana…

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