F/X weekly comment

So, we did see 1.17 after all this week. We didn't quite manage to hang on to it, but it was good to see while it was there. The quiet holiday markets finally closed at 1.1670. It's been another fun week at the office, with plenty to look back on. Before I do, I was distracted earlier by some proof of an old adage that I trot out occasionally. That is that if you owe your bank a relatively large sum of money, you have a problem. If however you owe your bank a stonkingly large sum of money, your bank has a problem.

Sean Quinn, a 64-year-old Irish ex property magnate, was declared bankrupt this week in Belfast over an alleged €2.8 billion debt owed to Anglo Irish Bank. It is believed to be one of the biggest bankruptcy orders of its kind ever made in either Ireland or Britain. It seems he has decided that Belfast is a better place to go bust than Dublin, as he can start up again in 12 months time, as opposed to 12 years in the republic...


Sterling

Does actually get a mention this week. As had been expected, the Bank of England voted to keep interest rates on hold and keep the QE/asset purchase programme/money printing on hold for now. Markets will now focus on next week's inflation report which could reveal the extent of weak economic fundamentals in the UK, and this could mean more QE in December. We had another set of mediocre economic data with a 2% monthly increase in manufacturing production offset by zero growth for the broader industrial production. HBOS reported higher house prices in October while the RICS said they were falling. NIESR’s (The National Institute of Economic and Social Research) estimated the growth of gross domestic product in the year to October at 0.5%.

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The Italian Stallion - Silvio, Silvio, wherefore art thou?

I'm not saying you heard it here first, but you did hear it here last week. The knives did indeed come out, and Bunga Bunga looks set to head off into the sunset, leaving centre stage to the :

Super Mario Brothers

Yes, we now have two Marios from whom to extract the Michael. Former European Union Competition Commissioner Mario Monti is ready to take power, assuming that Berlusconi plays ball on Monday. Monti will join Draghi in trying to work out a solution to this mess.

Greece also resolved its leadership issues and former European Central Bank Vice President Lucas Papademos is ready to take office as prime minister.

Anyone else think that drafting in two ex Europe bigwigs smacks a little of desperation?



What next?


What next indeed. I was discussing this with a client this afternoon. I feel the need to confess my sins as an ex international banker to new clients, as they'll probably find out eventually anyway.

I'm actually feeling some glimmer of optimism for sterling at present. I certainly don't think it will be all one way traffic, but the milestone of 1.20 isn't all that far away, and my holy grail of 1.25 doesn't seem all that far behind it. Not next week though. I think we have to accept quite a few reversals along the way. I think we may dip below 1.1600 during the week, and then start to build from there.