UK Budget and Bank of England Minutes
This morning at 9:30am we are due to hear the latest set of minutes from the Bank of England (BoE). The minutes should set out what was discussed at the interest rate decision at the start of the month by the BoE with possibly most importantly what the central bank voted in terms of Quantitative Easing (QE). Previously the bank has come very close to agreeing that more QE should be introduced and it is expected that this mornings minutes will again go to show the vote was very close and that QE was nearly introduced. Should this be the case we could see Sterling exchange rates fall from the current five week high we are at against the Euro.
Later on today we are also set to hear from the Chancellor George Osborne who will be delivering the latest budget for the UK which will give an indication as to how the government see the UK economy and what they plan to do to help get us out of the current mire. I believe that Osborne will try his best to put a positive spin on what is happening and the latest budget but I expect that they will have to concede that they are not going to hit their growth targets and they will have to increase some taxes while making cuts. It is also likely that they will push on with some public spending on large scale infrastructure projects such as HS2 – the high speed rail link from London to Birmingham, a project which has met huge public outcry and opposition. While I think that these large projects are in principal a good idea, the government needs to ensure that they are not making public cuts and raising taxes and then spending the money on projects that are not backed by the public as this could lead to political unrest. All in all Osborne faces a difficult day, our budget deficit is so high it is hard to justify borrowing more money, and making cuts is unlikely to go down well for the UK public, I do not envy the Chancellors job!
Cyprus Issues Mount – EUR Exchange Rates
Last night in an incredible twist we heard that the the Minsitry of Defence had shipped out €1 million in cash for British military personnel in case cash points stop working while the banks continue to remain closed for the forseeable future. We also heard that while the levy on anyone who holds a deposit with Cypriot banks was cancelled the finance minister of Cyprus resigned as the crisis mounted. It is expected that emergency talks will continue today and now the bank levy has been rejected it will be interesting to see how the country will get out of this financial conundrum they find themselves in. The rest of this week will remain key for Cyrpus, Europe and EUR exchange rates.
To stay informed of all the latest currency news on what could be one of the busiest days on the currency market for some time make sure you speak to one of our experienced currency brokers who will be happy to discuss your currency requirements and all the options available to you. You can call straight through to the trading floor on 01494 849752 or alternatively you can email me on email@example.com.