In a speech in Cardiff yesterday Governor of the Bank of England Mervyn King warned that the UK and other major economies will remain weak until banks have enough capital to be able to absorb “likely” future losses. King stated that further defaults should be expected but that the banks should not let that deter them from lending which remains at low levels. To get the economy growing again and help the UK recover from the current recession it is important that the banks lend to both businesses and private clients through mortgages and loans to help more money move through the economy. As a result King recommended that if the banks had an increased level of capital it would give them a higher level of protection from defaults but at the same time allow them to lend more. The Bank of England are currently running the Funding for Lending scheme which is where the central bank offer high street banks cheap money which they then have to pass onto other clients. This may only be a temporary measure but the take up has been strong with up to £60bn being made available. King rounded of his speech stating that despite the economy still being in recession there were some encouraging signs particularly in the jobs market which recently showed unemployment falling significantly.

Currently, Sterling exchange rates are still holding reasonably steady (although we did see an improvement in Sterling Euro rates yesterday) as we await the Gross Domestic Product figures which are due out tomorrow. This figure could indicate how Sterling rates are likely to move in the medium term and so anyone with an upcoming currency requirement should speak to one of our experienced currency brokers today to discuss all the options available to you. You can call staight through to our dealing floor on 0800 328 5884 or if calling from abroad on 0044 1494 725353 or you can email us on trh@currencies.co.uk