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Posted December 8th, 2008 by Charles Purdy

Weekly US$ rates and comments – week commencing 24th November 2008

Another week in the doldrums for sterling saw it fall against almost all major currencies, reaching a new record low against the euro and a multi-year low against the US$. The main focus of the week was the decision on interest rates from the Bank of England (BoE). Cutting UK interest rates from 3% to 2% was the expected move from the BoE with an eye on boosting the economy and helping thee ailing credit markets. However, the lack of any significant movement since the decision is testament to the limitations of monetary policy and how it will help the flagging UK economy in the short term.

 

A report from the National Bureau of Economic Research published early last week which suggested that the US$ had been in recession throughout 2008 meant that the US$, currently at 1.495/£1 had a poor start to last week. However, the fundamental strength in the US$ relative to sterling has been maintained by a continuing lack of other safe haven assets available. Poorer than anticipated Non-Farm Payroll figures and month-on-month unemployment data for November failed to see sterling make any headway against the US$, closing roughly 4.5% lower on the week.

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