General: Senior executives at Barclays Bank are weighing up the costs of moving the group’s headquarters from London to overseas, most probably New York. Firms in other sectors such as the advertising group WPP and the pharmaceutical company Shire, have moved offshore for tax reasons in a fairly painless manner. How¬ever, Barclays’ experts have discovered a raft of regulatory difficulties that don’t exist in other sectors.
Euro: Despite some great figures out of the northern European area, most notably Germany, some commenta¬tors are noting that the Euro is only as strong as its weakest link. Yesterday we saw financial troubles are start¬ing to return to the surface in Greece and Portugal. The Greek Finance Minister suggested anemic tax reve¬nues would make it difficult to sustain deficit cutting efforts. Perhaps more immediately threatening, government talks to get Portugal’s deficit under control reportedly broke down. The last month has seen a relatively period of stability across the single currency area but we feel it that tensions could resurface very quickly reigniting the sovereign debt bonfire and probable triggering of the bailout fund. On the opposing side we have some ECB members calling for the withdrawal of the extra ordinary measures put in place by the ECB leading to a rate rise in 2011. These two opposing forces could ultimately rip the euro zone in half and the economic landscape could look very different a couple of years from now.
DATA : EuroZone consumer confidence (OCT), EuroZone Business Climate (OCT)
Pound: British Pound Suffered yesterday and failed to capitalize on the bullishness created by Tuesday upside GDP surprise. Kicking off the doves was BoE member Charles Bean speaking about spare capacity in the econ¬omy. Second on the wire was Adam Posen the constant-dove who came out after the GDP reading to say that inflation above three percent was far from the threat of a double digit reading. That said, certain economists are now pricing in a UK rate rise for the second half of 2011 as inflation remains stubbornly high. This would of course push sterling higher but could have a damaging effect on the UK recovery. In terms of exchange rates The British Pound bounced back from a low of 1.5758 during the European trade along the 20-Day moving av¬erage at 1.5837, and the GBP/USD may continue to push higher over the near-term as investors begin to posi¬tion themselves for next week’s FED meeting. Against the Euro, sterling has struggled to break above 1.15, a level it has found solid resistance at over the previous month. Another failure to break above hers could signal a reversal and move back to 1.12 and below
DATA : CBI reported sales, GFK consumer confidence (OCT)
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