Weekly € rates and comments – week commencing 29th September 2008

In a steadier week on the markets sterling stayed within a relatively small range against most major currencies. Edging up slowly throughout last week, then faltering late on Thursday to recover again to similar levels on Friday afternoon. The damage to sterling on Thursday was much owed to the increased likelihood of the Bank of England cutting UK interest rates soon. A second member of the BoE committee made comments supporting such a move and although cuts will undoubtedly happen, the timing is unknown, especially as the full extent of the credit crunch is yet to be felt.

 

Europe is at a crossroads. The Republic of Ireland officially fell into recession last week as troubles in the economies of Spain and Germany compound the sentiment that the euro is only the best of a bad bunch. Interest rates could well be coming down in the following 2 quarters as the onus remains on combating inflation, according to the European Central Bank.

Weekly € rates and comments – week commencing 22nd September 2008

In a roller-coaster week, sterling rallied late and closed on Friday stronger against both the euro and the US$. Developments globally as well as domestically within the financial sector made for extremely volatile market conditions and an uncertain business climate. The FSA even having to introduce new restrictions on profiting from plummeting shares known as 'short-selling'. Lloyds and HBOS merged last week which may bring the loss of thousands of jobs but a necessary life-line to a lender with a huge share of the UK mortgage market. The Bank of England had voted 8 to 1 to keep rates on hold earlier in the month. The usual dissenter, Blanchflower, voting for a cut from the current 5%. The inflation and business growth balancing act is still on.

 

Mixed European market data and the events elsewhere made for an up-and-down week for the euro as it currently sits at 1.263/£1. Speculation of a cut in interest rates increased with the European Central Bank (ECB) confirming that its main focus remains on controlling inflation. But how well the Eurozone avoids the fall-out of the global credit crisis and maintains some of its momentum over the last year will be evident over the coming weeks. As only in the past few has it actually shown signs of faltering and that it is not immune to the credit-crunch.

Weekly € rates and comments – week commencing 15th September 2008

Sterling gained some ground last week following the record low levels of the previous week. With nothing specifically positive in terms of market data for sterling, it was the uncertainty surrounding of the state of the global economy that helped finish the week on the up.

  

The euro, currently at 1.2590/£1, has been less affected by the issues of inflation, which is reported in some quarters to be well above target figures, than it has been by the sudden slow-down within the economy forcing investors to rethink short-term strategies. The rise of the euro against the dollar is perhaps the only highlight in quiet week and a bad month overall.

Weekly € rates and comments – week commencing 8th September 2008

Chancellor Darling hardly inspired confidence at the start of last week describing the UK economy as being similar to the post war era of the late 1940's. Needles to say sterling began to lose value against most currencies. On Thursday, the Bank of England held UK interest rates. The BOE is still unsure what to do as it continues to worry about inflation while the economy falters. No sunshine on the horizon for sterling.

 

The €, currently at 1.2415/£1, is under pressure as most of Euro lands economies are suffering from the €'s high value. It has lost ground against the US$ but has yet to lose ground against sterling [in fact it is hitting record highs]. The European Central Bank kept € rates on hold last week again citing the conflict between inflation and the economy. They did highlight that they thought the € was significantly overvalued. Where the bottom for sterling is against the Euro is hard to say but best not to assume we cannot go under €1.20/£1.

 

Weekly € rates and comments – week commencing 1st September 2008

Sterling continued to fall throughout the week and lost ground on most major currencies as the intensifying talk of recession, poor market data and bleak forecasts for the UK economy took their toll on the pound in the markets. The Nationwide house price figures released on Thursday and further confirmation from Land registry certainly added to these woes. The steepest decline in prices since 1991 (and the last recession on these shores) will do nothing to boost confidence in a UK economy in dire need of reviving.

 

The euro is just about treading water at the moment currently at 1.2326/£1. Harmed by speculation of a potential recession over the past weeks, the euro has lost where the dollar has gained. However, thanks to comments from certain ECB members playing down 'premature' rumours of future cuts in interest rates, the euro rallied back against the pound and stemmed the flow against the US$ finishing the week only marginally lower.