CBI warn of government overspend
The government will have to borrow £100bn more than anticipated during the recession, the Confederation of British Industries (CBI) says. The figure is among dire predictions it makes about the UK economy in 2009. Despite this gloomy forecast, Sterlig gas remained steady most of today. It could well be the markets wait for figures to back up this prediction.
The CBI says that the economy will contract by 3.3% this year, compared with its previous forecast in November that it would shrink by 1.7%. The CBI predicts there will be 2.9 million people unemployed by the end of 2009, topping three million in 2010.
This prediction which is worse than orginally forecast may well wiegh heavy on the pound. More government spending and higher unemployment may well result in a weakening of the pound, and thus lower exchange rates if you are buying foreign currency. If you have a requirement to purchase currency in the next 9 months, consider fixing your rate now to eliminate the risk of market fluctuations.
Brown Rules out Lloyds Nationalisation
Gordon Brown's government does not plan to nationalise banking group Lloyds, his spokesman has said. Lloyds Banking Group shares fell 20% in morning trade in reaction to Friday's announcement of massive losses at HBOS, but by mid-afternoon were up 0.16%.
The early slump raised concerns Lloyds, which is 43%-government owned, could need more funds or be nationalised. But a spokesman for Mr Brown said the government was giving "no active consideration to nationalising Lloyds".
The Week Ahead
Today Sterling remained fairly steady against a basket of major currencies. The only UK data of not today was the Rightmove House Price Data provides a sample of residential property prices in the UK.
Tuesday - UK Consumer Price Index and Retail Price Index Data
GER ZEW index
US Housing Market Index
Wednesday -US Retail Sales
UK BoE Minutes (!)
Thursday - US Various Housing Data, Producer Prices, Jobless Claims
Friday - UK PMI Data
UK Retail Sales
US Consumer Prices
So, lots here that could well cause further volatility in the currency markets. This site will be updated daily with all the latest news from the Forex Markets. Check back tomorrow for a more detailed look at the days data.
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Labels: Exchange Rate Forecast