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Posted May 12th, 2008 by Charles Purdy

Weekly € rates and comments – week commencing 12th May 2008

 
 

Not a good week for sterling last week. Sterling is having a tough time as UK consumer confidence appears to be at record lows and UK industrial output fell 0.5%. The Bank of England kept UK interest rates on hold which was as expected. The market feels that the BOE could well cut UK interest rates every other month for the rest of this year. This is in sharp contrast to the US Fed who cut US interest rates aggressively in the first part of this year and who are not expected to cut again this year.

 

The Euro sits at €1.266/£1 inter bank. The European Central Bank continues to focus on inflation and as such there is little chance of cuts in Euro land interest rates, which were kept on hold this week, in the short to medium term. However, economic problems are still very much the order of the day in Euro land [retail sales fell in Germany in March by 0.4%] and I am sure these problems will “help” to reduce inflation and then we could well see Euro land interest rates fall.

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