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Posted December 17th, 2007 by Charles Purdy

Weekly € rates and comments – week commencing 17th December 2007


Sterling has been steady and has gained against most currencies apart from the US$. Economic news has been mixed with pressure on house prices and sales volume countered by a surge in production price inflation. The latter means that the market has become unsure on future cuts in UK interest rates. The central banks of the UK, US and Euro land agreed a financing package in an attempt to add liquidity to a market that was/is in danger of grinding to a halt. Still uncertain times and an uncertain future for sterling.



The € is still the preferred currency when the choice is the US$ or sterling and sits at €1.399/£1 inter bank. And inflation is also of concern to the European Central Bank. So any cuts in € interest rates are very unlikely short to medium term. But clearly the credit crunch is having an affect on Euro land as the ECB were part of the consortium noted above. And Euro land cannot be immune to the slow down elsewhere. They may not have the overhang of highly priced properties throughout Euro land but businesses need to export and if elsewhere is contracting and the strong € makes these exports less competitive then the € will suffer.

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