Currency Note

HSBC bought Silicon Valley Bank for £1 yesterday

By Roseanne Bradley March 14th, 2023

Yesterday HSBC bought Silicone Valley Bank for just £1 following its collapse

Yesterday, the UK arm of Silicon Valley Bank (SVB UK), was bought by British multinational banking and financial services organisation, HSBC. SVB, which has a balance sheet of £8.8bn, was bought for only £1 following its collapse.

HSBC group chief executive, Noel Quinn, said, that buying the UK arm of SVB strengthens Britain’s commercial banking franchise and “enhances our ability to serve innovative and fast-growing firms, including in the technology and life-science sectors, in the UK and internationally”.

The impact of the banking crisis reverberated throughout the markets, with the GBP/USD rate gaining 0.5% on the day. US stock indexes gave mixed performances yesterday. The Dow ended the day 90 points lower (after gaining 200 points) and the S&P 500 lost 0.1%. The Nasdaq 100 on the other hand added 0.4%.

European equity markets also suffered with stocks tumbling two-month lows on Monday, after the collapse of SVB sent European banks to their worst day in over a year. The Stoxx 600 declined 2.3% and the Stoxx bank index fell more than 5% after HSBC acquired the bank.

On the data front, investors have a busy day ahead.

We’ve just seen the the number of employed people in the UK increase by 65,000, well-above market forecasts of a 52,000 increase.

The U.S. Bureau of Labor Statistics will release the latest inflation data at lunchtime – markets are expecting the rate to rise/

Many will also be keeping a close eye on the latest inflation data from Spain.

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GBP: A close up of the UK’s Labour market

The rate of unemployment in the UK remained largely unchanged compared to the previous quarter. The rate was also below market consensus (of 3.8%). In detail, the number of unemployed people rose by 5,000 to 1.25m while employment levels rose by 65,000 to 32.84m (largely driven by part-time employees and self-employed workers).

Total pay growth also eased to 5.7% year-on-year in the three months to January, however wages dropped by 3.2% which was the largest decline since the February to April 2009 period.

GBP/USD: the past year

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EUR: All eyes on Italy’s industrial production

Italy’s industrial production figures will be released at 9am. In the last release, industrial production rose 1.6%, recovering from three consecutive months of contraction.

USD: Consumer inflation falls

According to the Federal Reserve Bank of New York, US consumer inflation expectations for the year ahead fell sharply to 4.2% in February of 2023. This marked the lowest levels since May 2021.

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