Sterling remains near its four month high against the floundering euro as the debt crisis continues to undermine the single currency.
The euro has managed to claw back a few points against the pound; however the pair have remained within a fifty pip range and near the four month high. The general opinion within the market seems to be for GBP to make further gains against the seventeen nation currency. Focus is fixed firmly on Portugal’s bond auction tomorrow. The question as to whether the more indebted nations within the EU can raise money is keeping EUR very much on the back foot. If the Portuguese do not manage to raise the necessary funds from the debt market, they will be forced to turn to the EU and IMF for financial aid.
Further bond auctions on Thursday for Spain and Italy could set the tone for the next few months, despite China and Japan’s rescue efforts.
In other news, it is bonus season for many city institutions and rumours are rife. JP Morgan are reported to be sharing £4.2billion between their 11,000 staff in London, the question of how big the bonus pool is at RBS is making politician’s blood boil and now Barclay’s is finding its name in the tabloids crosshair. Why? Well, the points outlined are based around the use of Cayman Island bank accounts to minimise the amount of tax paid in the UK and US. Which financial institution doesn’t? Surely we should revere a bank that made it through the financial crisis without needing to be bailed out? Surely we should take notes on the fact they came through the bad times having picked up some of the best bits of some failing companies? And, surely Bob Diamond deserves his £8million far more than Stephen Hester deserves his £2.5million?
If you have any strong views on bankers bonuses or currency related questions please feel free to make a comment.
Tom Hampton
Analyst – Caxton FX
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