A very difficult week for sterling. The Northern Rock saga dragged on and even when the government stepped in to secure the savers funds, the U-turn by the Bank of England in pumping additional liquidity into the market led to further pressure on sterling. Some semblance of stability seems to have returned by the end of the week. I still think that sterling is over sold [i.e. too low] but, short term, any bad news will have a greater effect than good news. Looks like a good time to repatriate funds to the
The Cypriot £, which is pegged to the €, sits at Cy.£ 0.833/£1 inter bank and continues to be in the ascendancy hitting levels not seen for 18 month against sterling. The Cypriot £ has gained 3 cents against sterling in the space of two weeks. This is a very significant move and I suspect an excessive response to the mishandling of the liquidity crisis by both the BOE and the UK Government. It should also be noted that market sentiment is that the European Central Bank will now not increase interest rates as indicated. This would be a significant change if proved correct. We will have to wait and see if it is true. It certainly seems a good time to repatriate funds to the
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