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

Sterling suffered another slump against the euro and drew massive media attention for hitting record lows daily. The fall in value of over 20% through this year has and will continue to have a serious impact on sectors the UK economy with added pressure on everyone from major importers through to British ex-pats having their pensions transfers sent overseas. On the flip-side of this, UK exporters who may have expected to benefit from the ever-cheapening pound have only found that business on the whole has slowed down as the global economic down-turn gains pace. Poor economic data continued to weigh on sterling with falling industrial production and a further contraction in the housing market all contributing to the demise of sterling.

 

European market data had been rather indifferent throughout last week but thanks to the obvious issues in the UK and America the euro made broad gains against sterling and the US$. Some of the advances from the euro are perhaps thanks to a less 'aggressive' approach from the European Central Bank (ECB) in reducing euro interest rates as well as comments this week from ECB board members suggesting that they are not guaranteeing further cuts in the early months of 2009.