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.