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Half baked

Today's news headlines:

‘Pay deal for NHS workers in England paves way to end strikes’.
The latest government offer of pay to nurses, ambulance drivers, and NHS workers in the UK appears meaningful enough to take back to its members for a vote. The measures include a 2% increase for 22-23 and a 5% increase for 23-24, which would be progressively applied. There is also a flat £1,250 payment for lower band earners. (Financial Times)

‘Wall Street banks to deposit $30bn into First Republic’. 
US Wall Street banks are placing deposits at the latest target – it might be inappropriate to say victims – of the SVB failure, First Republic. ‘JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo will each deposit $5bn... Goldman Sachs and Morgan Stanley will put in $2.5bn apiece while BNY Mellon, PNC Bank, State Street, Trust and US Bank are depositing $1bn each.’  The move is aimed at bolstering the liquidity capability of the California-based lender in order to reassure depositors. Still, some commentators, including Pershing Square's Bill Ackman, have posited that this just extends the exposure to all of Wall Street. (Financial Times)


Yesterday, the big news was the hawkish 0.5% hike by the European Central Bank, which many had argued would take a more conservative tack in the face of the SVB failure and dreaded contagion. Instead, it appeared to have drawn a line between their instruments, suggesting that interest rate cuts are aimed at inflation fighting, while balance sheet measures were ready to help support the bank system. The market has reacted by pushing US interest rates higher in anticipation of a similar approach by the Fed. If you have been reading our updates, we cautioned that markets were over-baking the interest rate expectation pudding (apologies for our terrible analogy). 


UK    Consumer Inflation Expectations: 9:30 AM
US    Capacity Utilization Rate: 1:15 PM
US    Industrial Production m/m: 1:15 PM
US    Prelim UoM Consumer Sentiment: 2:00 PM
US    Prelim UoM Inflation Expectations: 2:00 PM

Interbank rates*:

GBP/USD – 1.2160
GBP/EUR – 1.1400
EUR/USD – 1.0700
USD/CAD – 1.3690

Please contact your Dealer about any upcoming FX requirements you may have, or call +44 (0)20 3465 8200. 

*Indicative interbank rates taken on the day of writing. Please speak to your Dealer to find out the current rates available for you.