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Posted October 29th, 2007 by Charles Purdy

Weekly € rates and comments – week commencing 29th October 2007

 
 

Not a great week for sterling losing ground it seems against everything apart from the US$. The Bank of England warned that the UK remained vulnerable to shocks from the global credit squeeze which isn’t a surprise and certainly wasn’t a help to sterling. The housing market continues to suffer here in the UK with a significant reduction in mortgage approvals and it appears to be a buyers market. Also the market is beginning to believe that UK interest rate reductions are likely sooner rather than later. A period of uncertainty for sterling.

 

The € is still flavour of the month with reasonable economic data and as such both sterling and the US$ are losing ground. The € sits at €1.426/£1 inter bank. However, the Euro zone is slowing with even Germany reducing its growth forecast for 2008 from 2.4% to 2.0%. The European Central Bank is unlikely to reduce € interest rates in the short term as it is concerned about inflation and as such this will benefit the € given the expected interest rate cuts elsewhere. Still seems like an excellent time to repatriate € funds.

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