Weekly € rates and comments – week commencing 18th August 2008

Sterling's gains from the previous week were shed rather quickly following the Bank of England's inflation report last week. Sharp losses against almost all major currencies were felt as the reality concerning the state of the UK economy was spelt out in clear terms by Mervin King. An easing bias, or in layman's terms, the intention to cut the base rate to help boost growth within the economy, was the main theme drawn from the report as the markets adjusted, sending sterling yet another step back in its climb out of the mire.

The Euro, currently at 1.2660/£1 had a relatively quiet week and maintained its prices against sterling, as it had done for the last few months now. There was no other significant movement for or against, with exception of rates against the US$. The Euro's outlook is slowly beginning to darken due to a speculation of a potential recession in key member states of the EU and rate cuts to come perhaps by the end of the year. How quickly the tables turn.