Financial Markets Review by Lloyds TSB

The pound was buoyed by data this week suggesting the UK could emerge from recession as early as the current quarter. This saw £/$ briefly rally though 1.66 and £/€ strengthen above 1.17.

Pound rallies on signs of UK recovery

The pound was buoyed by data this week suggesting the UK could emerge from recession as early as the current quarter. This saw £/$ briefly rally though 1.66 and £/€ strengthen above 1.17.

Gilts under performed treasuries and bunds following stronger than expected UK economic data and a surprise increase in Q2 inflation expectations. 5y swaps rose above 3.70%.

In emerging markets, the Hungarian forint was the best performer this week against the US$. In stark contrast, the Icelandic krona saw the biggest fall.

The Swedish krona rallied this week after the ECB agreed to lend the Riksbank €3bn to bolster its reserves to protect against any potential problems for its banking sector emanating from its high exposure to the Baltic region.

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