Halloween horror: Fed slashes rates but is sterling the victim too?

From: World First
Published: Sat Nov 01 2008


The fed slashed rates by 50bps yesterday and sterling rebounded as a result. However, the greenback may not be the only victim of this unprecedented slashing spree. David Blanchflower, a member of the BoE monetary committee, again urged the UK to continue cutting interest rates to avoid a ‘long and deep recession’. With a 50 bps rate cut next Thursday already priced into the sterling crosses, any form of deviation from expectation could cause more volatility.

Senior Foreign Exchange dealer at World First, Craig Johnson, said, “With terrifying volatility in the major crosses it has never been a better time to consider prudently hedging currency exposure. With US interest rates having been massacred again by 50bps the UK and Eurozone are almost certain to follow suit. Although the dollar weakened overnight, I certainly wouldn’t bet on a sterling recovery and I fear that the dollar could well strengthen beyond all exception once the UK rate cut is announced next Thursday.”

This and today’s reported 15% fall in house prices puts further pressure on the UK economy and fuels the fire of the gloom and doomsters. Happy Halloween one and all.

Ends

Notes to editors:

How to hedge your exposure with World First:

World First offers foreign exchange options, where you secure a ‘worse case rate’ for a transaction on a date in the future but if the exchange rate subsequently moves in your favour, you can transact at the more favourable rate.

Available for comment:

Craig Johnson: Senior Foreign Exchange Dealer
Jonathan Quin: Director

For further information, quotes, comment and case studies, please contact:

Wendy Casterton
Tel: 020 7801 1060
Email: wendy.casterton@worldfirst.com

About World First:
World First is a currency exchange broker, serving both private and corporate clients. Set up in 2004 by directors Jonathan Quin and Nick Robinson, the company is experiencing very fast growth and now employs over 50 people in two offices (London, UK and Hamilton, New Zealand). It has 20,000 clients and will transact over £1 billion in 2008.
World First’s corporate clients are generally import or export companies, making regular transfers. World First helps them minimise their exchange rate risk and manage their currency exposure.

Private clients largely use broker services to purchase a property abroad, usually a second home or investment or to emigrate.

World First is also now offering currency options to SMEs and private clients through World First Markets Ltd, which is authorised and regulated in the UK by the FSA. World First is the first and currently only broker to offer currency options which have, until now, been the preserve of very large corporate organisations through their banks.
Company: World First
Contact Name: Wendy Casterton
Contact Email: wendy.casterton@worldfirst.com
Contact Phone: 020 7801 1060

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