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

The downward trend for sterling has continued. More record lows were recorded against the euro and the dismal outlook for business growth, falling house prices and rising unemployment has only compounded matters. Exchange bureaus are now officially offering less than €1/£1 and the market rates are only a few cents away from parity. Consumer confidence has been severely dented according to the Bank of England's minutes, which were released last week and the UK's outlook is increasingly negative. Better-than-expected UK retail sales data both year-on-year and month-on-month did nothing much to help. Still no sign of any upside for Sterling.

 

Mixed Eurozone data and the continuing speculation that the European Central Bank will not slash interest rates in the same manor as the UK and US saw the euro make substantial gains against the US$ and sterling. The outlook for 2009 remains gloomy for Europe and according to some analysts the delay in cutting interest rates could prove to have a prolonging effect on the recession and a mistake in the long-term.