Currency market updates - from Foreign Currency Direct (www.currencies.co.uk)

Friday August 24th 2007

By Michael Vaughn - Senior Executive Dealer

Sterling strengthened across the board against most major currencies yesterday gaining 0.4% on the day against the euro and 0.5% against the USD as a sense of calm across financial markets boosted investors' appetite for risk, lifting high-yielding currencies. The main currencies to strengthen against sterling were the kiwi and the AUD, gaining 0.6% and 0.2% respectively – these being the main beneficiary of the carry trade.

UK

Sterling was a large benefactor from The Bank of Japan refraining to raise interest rates earlier yesterday as it chose to leave the benchmark borrowing costs at an ultra-low 0.5 percent. Meanwhile the Bank of America said it will invest $2 billion in the largest U.S. mortgage company, Countrywide Financial Corp. Both factors contributed to soothing investors' concerns about a credit crunch and liquidity drying up and in this environment dealers are more liable to put on carry trades, where low-yielding units such as the yen are sold for relatively high-yielding ones like sterling, NZD and AUD.

"Better sentiment has translated into demand for the high yielder’s and this is likely to remain a theme as long as volatility continues to decline," wrote RBS Global Banking strategists in a research note on Thursday.

Yesterdays trading was a reversal to the current trend we have seen for sterling. In the past 3 weeks sterling has lost nearly 8 cents against the USD and just shy of 2 cents against the euro – with this recent spike could there be a more opportune time to take advantage? Contact your account manager to discuss the best option for you as should volatility creep back into the markets, current buying levels may not last for too long.

The Great British Bail Out

Figures from the Office for National Statistics indicate that some 385,000 people left the UK for the long term in the year to mid-2006. Some 196,000 of those were British citizens. The exodus is countered by high levels of immigration, with the Office for National Statistics saying that 574,000 people came to live in Britain between June 2005 and 2006.

Independent experts said the high emigration figures showed that many Britons are fed up with life here and believe they will do better elsewhere.

Liam Clifford, of consultancy firm globalvisas.com, said his company had 50,000 inquiries from would-be emigrants last month alone."They do not believe that the services and the system can cope with the number of people coming into the UK at the moment," he said. "Even fairly rural areas and villages seem to be coming under the threat of having an increased population and lack of services."

According to the BBC one of those Britons who chose to make the move abroad was Roy Bevis, 64, who traded in his home in Aylesbury, Buckinghamshire, three years ago for one on the banks of Lake Como in Italy. And he has no regrets. Mr Bevis said he became fed up with life in Britain for many reasons.

“I looked at property prices here in Italy, and at that time they were a third of what they were in the UK. So I just thought, I might as well sell up and buy somewhere." Now, he says his bills are minimal, healthcare is "second to none" and he can travel around by train relatively cheaply. In addition, the weather is warm all year round and he is enjoying friendships with neighbours from all over the world, including America, Australia, Germany, the Netherlands and the UK.

When asked if there was anything Mr Bevis missed about Britain - he replied "Oh yes - baked beans,"

And Finally

A pensioner has put his house on the market for 400 times what his family paid for it almost 80 years ago. The three-bed semi John Hatchett's father-in-law bought new in 1929 for £1,095 has now been valued at £435,000.

John, 81, moved in with wife Jean and her parents Tom and Milly Taylor at the house in Hove, East Sussex, in 1951 when they married, reports the Daily Mirror. Jean died in February last year and grandad-of-two John has put the property up for sale because it is too big for him. He said: "My wife lived here her whole life and we raised our son here. I've many good memories of living here."

Estate agent John Healy said: "It is very unusual for a home this old to have been owned by one family.
"I've worked in this business 40 years and have never come across it."