Sterling has had a bad week. First the minutes of the last Bank of England interest rate meeting were released and showed that the vote to reduce interest rates was unanimous. This surprised the market. Then the balance of payment figures were released. These were very bad with a huge net outflow of funds from the UK. And now the Christmas retail period is not going as well as hoped and house prices continue to fall in most places. All doom and gloom so it is not a surprise that sterling is suffering. Sterling only seemed to make a gain against the South African rand. Shows how the market views the new head of the ANC in South Africa! But I suppose they did win the rugby world cup.

The US$ has been on the up and sits at US$1.984/£1 inter bank. No clear reasons as to why apart from the need for US financial institutions to realise their investments so as to make their balance sheets look as good as they can by the year end. Also investors needed to cut their losses if they had “bet” on the US$ would lose further value. However I do wonder if this positive news is short term given the major economic problems faced by the US$ in 2008.

ALL THE VERY BEST FOR 2008.