Final round to Cameron…

Last night, the final leaders’ debate last focused on the economy with messers Cameron, Clegg and Brown answering questions ranging from the deficit to unemployment to benefits. However, given that in theory at least, the subject material divided the parties much more than the previous exchanges and therefore one may expect more of a ‘debate’, the overall spectacle was extremely poor. Mr. Cameron was judged by snap polls to be the winner, but petty squabbles and an inability to answer questions properly on important issue and dodge committing to actual figures were the main themes the leaders brought to the debating plinth.

A hung parliament is still the book maker’s favourite outcome, but Mr. Cameron’s (relative) strength last night has at least opened the door to a one party majority gaining power. Sterling has reacted positively to the news, moving above 1.53 against the Dollar and towards 1.16 vs the Euro and given a boost this morning by the announcement of record profits by Barclays.

Over in Europe, Greece has announced further austerity measures totalling €24 bn. We have also received supposedly reassuring messages from top Portuguese and Spanish politicians on how committed they are to economic stability and that debt levels in both counties is under control. Déjà vu anyone? With German officials leaking that they think the Greek bailout may cost €120 billion over three years, leading economists a furiously calculating just how much it might cost to do the same for the rest of the PIIGS. The first tentative answer… the massively scary number of €600bn.

A quiet day for the USD, unemployment figures showed a decline of 11,000 but focus will be on today’s release of Q1 GDP figures. The forecast number is 0.9%, a very positive number, anything under or over that look for a swing in the value of the USD.

Other data out today is the University of Michigan confidence survey, another closely watched measure of the USD economic outlook and a large amount of Eurozone PPI and CPI data.

report by Alistair Cotton

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