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Posted January 2nd, 2008 by Charles Purdy

Weekly US$ rates and comments – week commencing 1st January 2008


Sterling seems to have no friends.  Has Gordon Brown finally been found out? The UK has both a balance of payment and a budget deficit both of which need to be funded. With UK interest rates falling this is proving to be somewhat difficult and it is very difficult to gauge where the bottom is for sterling against certain currencies, especially the € where we are in unchartered territory. The markets have started to think that UK interest rates may fall by as much as 1% next year. Only a short while ago the market was predicting a reduction of 0.5%.


The US$ has been steady over the Christmas period and sits at US$1.984/£1 inter bank. Similar to the UK the US has significant economic problems to overcome and like the UK, the US interest rates are expected to fall. So although the US$ may hold its own against sterling it will have difficulty against other currencies.



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