Good morning. Sterling made a smart recovery on Friday against most of its G10 counterparts as risk aversion among investors receded despite the Bank of England announcing quantitative easing on Thursday. Higher than expected Non-farm payroll hike in the US is said to be the trigger as fears of the US sliding back into a double-dip recession eased. The UK PPI numbers \u2013 which came in higher than expected, also helped Cable. The market seems to have taken the downgrade of 12 UK banks and credit societies in its stride. <\/p>\n
Ratings agency Fitch downgraded Spain and Italy late Friday evening. While Italy\u2019s downgrade didn\u2019t come as a surprise \u2013 since Moody\u2019s and S&P have already cut its rating and Fitch simply followed, the Spanish downgrade did come as a surprise. Fitch cited high debt levels and weak economic growth as the reason for downward revision.<\/p>\n
Europe is again expected to hog the limelight this week as Merkel and Sarkozy issued a joint statement stating that \u201cBy the end of the month, we will have responded to the crisis issue and to the vision issue.\u201d As French and Belgian governments step in to save Dexia bank from collapsing, expect a ratings cut for Belgium in the coming weeks. Moody\u2019s have already put the country on negative watch on Friday as Belgian government alone picks up the \u20ac4 billion tab for Dexia. The details on the creation of a \u2018bad bank\u2019 that holds all toxic assets and bonds is expected later today. Dexia bank\u2019s balance sheet have also put a question mark over France\u2019s status as a AAA economy.<\/p>\n
GBP\/EURO \u2013 1.1530
\nGBP\/US$ \u2013 1.5618
\nGBP\/CHF \u2013 1.4277
\nGBP\/CAN$ – 1.6090
\nGBP\/AUS$ \u2013 1.5790
\nGBP\/ZAR \u2013 12.2510
\nGBP\/JPY \u2013 119.68
\nGBP\/HKD \u2013 12.1620
\nGBP\/NZD \u2013 2.0074
\nGBP\/SEK \u2013 10.5270<\/p>\n