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.