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Posted March 3rd, 2008 by Charles Purdy

Weekly Euro rates and comments – week commencing 3rd March 2008

 

UK economic news continues to be poor including UK consumer confidence, slowing house price inflation and fourth quarter growth that looked over reliant on government expenditure. However, most of the main “stories” came from elsewhere and because of this sterling’s fate was a one of contrast gaining against some currencies and losing against others. The Bank of England meets later this week and it will be interesting to see if they reduce UK interest rates. Clearly the UK economy is suffering and the credit crunch is still causing significant difficulties to the financial arena. But inflation continues to be a major problem and therefore UK interest rate cuts may not happen as quickly as expected or hoped for.

 

The €, which sits at €1.3062/£1, has benefited from the problems of the US$ and from better than expected economic news especially in Germany. German business confidence was better than expected and we also saw German unemployment fall. However it is not all good news in Euro land with French consumer confidence falling but the overall feeling from the market is that Euro land interest rates will be held for a while. The European Central Bank meets later this week.

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