Weekly € rates and comments - week commencing 10th March 2008

 

Sterling gained some ground against most currencies. The Bank of England kept UK interest rates on hold which was very much as the market expected. In February, UK consumer confidence continued to fall but the UK services sector did better than expected. This conflicting data highlights how difficult a job the BOE has. Cuts in UK interest rates are expected but timing will be the issue.

 

The Euro sits at €1.311/£1 inter bank and is benefiting from the "benign" economic conditions in Euro land. Economic conditions are probably not that benign just a lot better than elsewhere. The European Central Bank kept € interest rates on hold last week which was as expected. The ECB also raised its forecast for inflation and trimmed those for economic growth. However it was stressed by the ECB that it is mandated to ensure price stability which has in effect ruled out any short or medium term Euro interest rate cuts.