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Posted February 25th, 2008 by Charles Purdy

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

 

Sterling lost ground following our beloved governments decision to nationalise Northern Rock. Not a great outcome but it will hopefully draw a line under a very damaging event to the UK‘s reputation. Sterling has lost significantly against most if not all currencies since the problems at Northern Rock were made public. The Bank of England still has other problems not least of which is the conflict between rising costs and a faltering UK economy. The minutes of the BOE’s last meeting highlighted this conflict and as a result, the market has tempered its expectations as to the speed and extent of UK interest rate reductions. I still believe sterling is oversold [i.e. sterling should strengthen over the medium term but the reality could be a lot different]. Also beware of another major shock like Northern Rock as we would see sterling slide rapidly.

 

The € sits at €1.324 interbank. Euro land is an interesting mix given Germany is still performing whereas those countries such as Ireland where there has been a huge property boom are suffering. Allied Irish Bank is having to “look after” € 700 million of loans to property developers who are suffering cash flow problems. I suspect such situations will continue to rise. The European Central Bank is likely to hold interest rates steady for the time being.

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Posted February 18th, 2008 by Charles Purdy

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

  Sterling again held the middle ground. The Governor of the Bank of England highlighted the problem of rising costs and a faltering UK economy. UK Inflation could be as high as 3% by year end whereas the target is 2%. As a result, the market has tempered its expectations as to the speed and  Continue Reading…

Posted February 11th, 2008 by Charles Purdy

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

  Sterling held the middle ground this week. The Bank of England reduced UK interest rates by 0.25% which was as expected. The UK economy continues to suffer with weakening demand and continued disruption to the financial markets. UK manufacturing output fell in December which was contrary to expectations. However, inflation continues to exceed the  Continue Reading…

Posted February 4th, 2008 by Charles Purdy

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

    Sterling had been doing okay until Friday of last week when it lost ground against most currencies. It seems to have been a culmination of the weeks woes; bad housing figures, inflation forecast to be over 3% [target is 2%] plus the fact that the market expects the Bank of England to cut  Continue Reading…

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