Financial Markets Review by Lloyds TSB

In the G-10 currency space, the pound produced a mid table performance this week. It scored against low yielding currencies and lost ground to commodity currencies.

Sterling stumbles over BoE Inflation Report

In the G-10 currency space, the pound produced a mid table performance this week. It scored against low yielding currencies and lost ground to commodity currencies.

The rally in global equity markets and widening interest rate spreads against the US provided a bearish environment for the USD.

The Brazilian real bucked the strengthening emerging market currency theme – weakening against the USD as speculation grew that the government may raise the tax on foreign purchases of equities and bonds.

The longer end of the gilt curve drew good support and yields ended the week a fraction lower, supported by solid demand for UK and US 10 paper, and benign BoE inflation projections. UK 5y swaps dropped 11bps to 3.31%. 3-month libor ended the week unchanged at 0.61%.

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