Euro Pounds Brief Monday 29th January 2007

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Monday 29/01/2007

• Higher Borrowing Costs Hit Commercial Property Boom (FT)
• BoE's Blanchflower (MPC) Said He Was "As Hawkish As Anyone" On Inflation
• BoJ Made Right Choice To Delay Rate Increase, Nakagawa Said
• Trichet said ECB that it must monitor all economic trends closely
• Oil prices were higher in Asian trading hours

US Dollar:

The USD index moved to two-month highs on Friday, as the greenback was aided by better than expected
U.S. data. The December durables report came in well above forecasts, while December new home sales were
above forecasts as well, and added to the sentiment that the U.S. housing market continues to stabilize. All
this said, USD gains were relatively fleeting. With the dollar index back to trend highs, and the weekend
looming, sources reported fairly decent position squaring interest under way into the London close, though
looking ahead, most analysts suspect the greenback's downside will be limited into next week's heavy U.S.
economic calendar. The U.S. currency also rose this week against the British pound and Swiss franc as the
reports cooled speculation the Federal Reserve's next move will be to cut interest rates.

Pound:

U.K. house-price inflation reached the fastest pace in more than three years in January, led by London, as
record bonuses for bankers blunted the effect of interest-rate increases, Hometrack Ltd. said. The cost of a
home in England and Wales rose an annual 6 percent, the biggest increase since July 2003, to an average
170,800 pounds. On the month, prices increased 0.4 percent. An 8.8 billion-pound bonus round and a shortage
of homes leaves prices rising, even after three interest-rate increases by the Bank of England.

Euro:

European Central Bank President Jean- Claude Trichet said the fastest money supply growth in 17 years validated
recent interest rate increases. ``Economic indicators justify the steps we have taken in the past,''
Trichet said .He said central bankers were ``closely'' monitoring data on loans, real estate prices and energy
costs. Investor expectations that it will raise the benchmark 3.5 percent interest rate another quarter point in

March.

General News:
• On the economic front, although the FOMC will take centre stage this week, there's
calendar to excite ahead of the next Bank of England interest rate decision on Feb 8.
• 12.00 CBI Distributive Trades Survey (Jan) sales balance Prev 25.
• The housing market was dramatically slowing down even before January’s rate hike according to BOE
and Nationwide figures. BOE
mortgage date is likely to show declining lending figures, according to Investec.
• Oil Prices Rose Closer To The $56.00 A Barrel Mark Overnight, Supported By A Cold Snap In Top Consumer
The US And By
• Escalating Political Tensions In Iran And Nigeria (RTRS)

Interbank
Updated 29th January
GB POUNDS / US DOLLAR 1.9590
GB POUND / EURO 1.5163
EUR/USD 1.2918
GBP/JPY 238.69
GBP/AUD 2.5333
GBP/NZD 2.8123
GBP/ZAR 14.2500
GBP/CHF 2.4576
GBP/CAD 2.3103
GBP/SGD 3.0164
GBP/THB 66.490
GBP/HKD 15.3022