Weekly € rates and comments - week commencing 28th April 2008

 

A bit like the previous week sterling had a good end to the week. The major factor at the end of last week was weakness in German business confidence. Also the minutes of the last Bank of England meeting were released and they showed that two members of the committee voted against reducing UK interest rates which was a surprise. So relative to the last few months the last two weeks have seen a bit of stability for sterling. How long this will last or if this is the base for sterling from which to regain lost ground is too soon to say.

 

The €, which sits at €1.265/£1 inter bank, lost ground at the end of last week, as a survey showed that German business confidence had deteriorated more than expected in April. Given that the German economy is the mainstay of Euro land this is a worrying sign for Euro land. The market has even started talking about € interest rate cuts. This may be premature but when they do start to cut Euro land interest rates the € will suffer.

Weekly € rates and comments - week commencing 21st April 2008

 

Sterling had a good end to last week. A couple of factors seemed to benefit sterling. Firstly the Royal Bank of Scotland is expected to announce a rights issue which indicates that UK banks have started to restore their balance sheets. Also it is thought that the Government is set to announce plans to ease tight conditions in the mortgage market which should help banks to start lending to each other. Hopefully these positive factors will allow sterling to regain some equilibrium short term.

 

The € had an interesting week and sits at €1.254/£1 inter bank. Euro land inflation is still at the top end of expectations which means that the European Central Bank will not cut the € interest rates in the short to medium term. However, there are ever rising concerns about the Euro land economy. The strength of the € is making Euro land exports ever more expensive. The € maintains its "safe haven" status which it has held for a while but pressure is continuing to rise in Euro land.

Weekly € rates and comments - week commencing 14th April 2008

 

 

No joy for sterling last week. The Bank of England cut UK interest rates by 0.25% which was as expected. However from the announcement which accompanied the cut the BOE warned that the credit problems were beginning to effect more than just the financial market. So where to from here. I suspect further weakness for sterling.

 

The € continues to hit highs against the US$ and sterling and sits at €1.250/£1 inter bank. Euro land economic conditions in Germany, France, Belgium and the Netherlands continue to prosper whereas Spain and Italy are less than rosy. However the former are having the greater influence with the European Central Bank keeping € interest rates on hold last week and there is very little possibility in a reduction short term. So the € maintains its "safe haven" status.

€ rates and comments - week commencing 7th April 2008

 

Over the course of last week sterling held steady against most other currencies. The availability of mortgages continues to be a problem for the housing market as the banks take the classic approach in such times by restricting supply and improving margins. Probably making the same money with a lot less risk. Business confidence in the UK continues to ebb away and the Bank of England meets later this week and the expectation is for a 0.25% cut in UK interest rates. The surprise would be no cut at all. No significant upside for sterling short term.

 

 

The € is still viewed as the safe haven asset and sits at €1.265/£1 inter bank. However, a few more chinks began to appear in the €'s armour. Retails sales in Germany were worse than expected. In fact they fell. Also the Euro lands services purchasing managers index fell in March which again indicates problems with the economy. But the European Central Bank continues to highlight the importance of its fight against inflation so no chance of cuts in Euro land interest rates any time soon. So don't expect any gains for sterling against the € short term.