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Posted November 3rd, 2008 by Charles Purdy

Weekly € rates and comments – week commencing 3rd November 2008

Sterling rose steadily against the euro throughout a relatively quiet week for market data. Closing last week only marginally up against the US$ despite another period of high price volatility the sterling to US$ rate moved in a huge range over the last five days of around 8%. The reductions in LIBOR (inter-bank lending rates), which were significantly reduced over previous weeks, were intended to bring more stability to the markets and ease conditions for the money lenders. However, the aftermath of the last few months in the credit crisis are leaving investors and business confidence still very much at a low. This week’s decision on interest rates from the Bank of will provide a shock only if rates are not cut, with many expecting a further half a percent off to follow last month’s emergency cut of the same value.


The European Central Bank may also be in line for cutting interest rates this week and despite no promises being given from Jean-Claude Trichet, the fact that inflation has been measured again to be returning to more manageable levels will have left the door open for a move from the ECB sure to ease conditions for business growth in a stalling economy. The euro’s value against sterling, currently at 1.2635/£1, is still holding firm whilst having lost well over 20% of its value against the US$ since July.

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