Weekly € rates and comments – week commencing 25th August 2008

Following a quiet start to the week for market data, sterling faltered again towards the end of last week. Poor second quarter GDP and retail sales data sent the pound lower still against the US$ and to the lower end of its recent four month trading range against the euro. For the second month running the Bank of England's meeting minutes released last week highlighted a difference of opinion within the ranks of the MPC by way of a three-way split, suggesting perhaps that long-term policy remains undecided.

 

Although ending the week higher against the Pound and the US$, the euro, currently at 1.2540/£1, had an indifferent week on the markets as rumours persist of its economy having ground to a halt. Weak German economic data and a decline in business confidence have leant to the feeling that interest rates could well be lowered in the following year as the credit crunch, now a year old, is finally beginning to take its toll on the Euro-zone.

Weekly € rates and comments – week commencing 18th August 2008

Sterling's gains from the previous week were shed rather quickly following the Bank of England's inflation report last week. Sharp losses against almost all major currencies were felt as the reality concerning the state of the UK economy was spelt out in clear terms by Mervin King. An easing bias, or in layman's terms, the intention to cut the base rate to help boost growth within the economy, was the main theme drawn from the report as the markets adjusted, sending sterling yet another step back in its climb out of the mire.

The Euro, currently at 1.2660/£1 had a relatively quiet week and maintained its prices against sterling, as it had done for the last few months now. There was no other significant movement for or against, with exception of rates against the US$. The Euro's outlook is slowly beginning to darken due to a speculation of a potential recession in key member states of the EU and rate cuts to come perhaps by the end of the year. How quickly the tables turn.

Weekly € rates and comments – week commencing 11th August 2008

Sterling had a quiet start to last week as speculation regarding future monetary policy and the interest rate announcement from the Bank of England on Thursday were the main focus of attention. No great surprises were expected and rates were kept on hold. However, despite more unfavourable data regarding growth and manufacturing the pound kept within its recent trading range against most major currencies, except the US$ which continued to strengthen. That was until Thursday lunchtime and Jean Claude Trichet's statement following the ECB's own announcement on Interest rates.

 

 

As Trichet's speech outlined in plain terms a significant slowdown in European growth and well above target inflation in the Eurozone, the Euro, currently at 1.275/£1 edged down against the pound and lost further significant ground against the US$. This was the sort of news that has been hoped for on this side of the water and has supported the view that no-one will be immune to the credit crunch and the current global financial issues.

Weekly € rates and comments – week commencing 4th August 2008

It was another week of mediocrity on the markets for Sterling as the onus had been shifted to achieving some stability in the economy. For all of the unflattering economic data that was released over the last week, it has been the consistency of equally poor data from the Eurozone that helped keep the pound with its head above the water. Energy prices soared from some of the UK's largest suppliers and further inflationary issues are keeping the Bank of England's hands tied over making a much needed cut in interest rates to boost growth.

  

Europe was showing more, clear signs of slowing growth and pulled back from its record highs against the US dollar in the previous week and is currently at 1.2640/£1. The spectre of high inflation is now no-longer a concern for the UK alone, as reports from July showed inflation to have reached 4.1% in the Eurozone in the last quarter. Consumer confidence has shown to have decreased substantially and a hike in interest rates will be even less likely this year.