Focus on Barclays ‘Bad Boys’
4 July, 2012
Following the release of European and UK Services PMI data this morning and then European retail sales, the market’s focus will almost certainly shift to Whitehall and the Treasury Select Committee’s interrogation of Bob Diamond. Mr Diamond resigned yesterday following the announcement of the Libor fixing scandal and Barclays’ part in it. He was one of three senior management figures from Barclays to resign over this incident, and the markets will be keen to see how aware of his traders’ actions he was, and whether he was complicit in any way. Rumours abound that the Barclays’ men had conversations with members of the Bank of England who might have indicated that their traders subsequent behaviour would be acceptable, threaten to tarnish the whole of the UK’s finance industry. Mr Diamond can expect a very in depth grilling with the Treasury Committee, with them certain to take their seven pounds of flesh.
David Cameron also received a bit of a grilling by MPs yesterday on this subject, and any hopes of today’s Prime Ministers Questions going off without a hitch are sure to be slim. He probably wishes he had the time travelling technology of the Men in Black to go back and alter the events on the Barclays trading floor.
It is widely expected that around 18 further banks will be implicated in this scandal. Many of these are spread around the world, with 2 or 3 more UK banks expected to succumb to large FSA fines. So the whole situation looks set to continue for many months, with many more bankers likely to be revealed as enemies of the state.
How this will affect your potential currency purchase is hard to predict, but pressure on the UK’s largest single GDP producing sector can mean only negative things for the UK’s economic outlook, and will certainly require some Ali-esque ducking and weaving to come out the other side too unscathed. So make sure you keep in close touch with your Currency Index account manager.
In other news today is US Independence day, so not much happening on that side of the Atlantic, which could lead to some gains against an otherwise dormant US Dollar.
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