The main news going forwards is the meeting with EU leaders regards the debt crisis, the looming budget, and the news that the new Chancellor will give the Bank of England the key role in regulating the UK financial sector. Rates at 08:30am this morning are as follows:
EU Leaders meet to discuss debt crisis
EU leaders are to meet to tackle the challenge of getting economic growth back on track while reining in the worst public debts for decades. Leaders are intent on preventing contagion from the Greek budget crisis. This meeting could cause rates to swing either way. If a robust plan is agreed that gives the market confidence, the Euro could strengthen and rates could drop significantly. If however no clear plan is agreed, markets will remain wary and the Euro will remain weak.
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What will happen next in the currency markets?
In the short term, we see Retail Sales for the UK at 09:30am that could move Sterling exchange rates. In the medium term focus will be on the EU meeting, next weeks G20 meeting, and the upcoming budget by the new coalition government. We'll look at how the budget will affect exchange rates next week.
Power to return to the Bank of England
George Osbourne has confirmed that the FSA would be broken up and the part that monitors financial institutions would continue as a "new prudential regulator" but would operate as a full subsidiary of the Bank of England. The parts that protect consumers and crack down on crime will be injected respectively into a new Consumer Protection Agency and an Economic Crime Agency.
He also said the government would create a powerful new Financial Policy Committee at the Bank of England. You can read a full report on the news here on the BBC. This ties in with questions we are often asked about the security of funds when using FCG to transfer funds abroad. We'll take a detailed look at the measures in place that ensure your funds are safe in tomorrows post.
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