Weekly € rates and comments – week commencing 17th November 2008

Sterling is in the pits. The constant stream of increasingly negative data over the last year as well as the gloomy outlooks on the year ahead have left a sad picture of the UK economy. The recent flurry of well publicised job cuts and the ever growing sense of an impending recession (that may or may not have 'technically' started already) has new, unwanted benchmarks being set by sterling daily. The hope that monetary policy will be of any help against the current woes in the short term and this within a financial system already proven to be flawed is perhaps over optimistic. So don't expect any upside for sterling in the short term. Further downside seems more likely.

The €'s price against sterling, currently 1.178/£1, is flattered by the total decimation of the pound. Against the US$ however, the euro has itself lost an awful lot of ground in the past six months. The fact that last week Germany officially fell into recession was countered by news that the French economy has bucked the current trend and actually grown fractionally in the last quarter has kept the single currency treading water. Interest rates in the eurozone may well be lowered over the coming months but the sharing of the burden amongst the Europeans has arguably helped some individual nations from the perils now affecting the UK economy.