Sterling has had a steady week against the Euro and the US$ but lost ground against the commodity backed currencies of Canada and Australia. The Bank of England met this week and UK interest rates were kept on hold. This was as expected. The trouble with the BOE is that it takes a couple of weeks for the minutes of the meeting to be released which means that we are unsure how the 9 members voted and unclear on how they view the current economic climate. Are they still worried about inflation or are they worried about the economy slowing too quickly? We will have to wait and see. Thankfully there has been no further fall out from Northern Rock Bank.
The Cypriot £, which is pegged to the Euro, has continued to weaken albeit slightly to Cy.£0.839/£1. The European Central Bank kept the € interest rates on hold. This was as expected but unlike the BOE they do "talk" to the market at the same time as making the announcement. The language used by the ECB has led the market to believe that Euro interest rates are unlikely to be raised in the next few months if at all. Also there has been a lot of talk in the press about the strength of the € relative to the US$ really beginning to hurt Euro land exporters. Difficult to assess the effect this is happening but again it supports the view that Euro land interest rates are on hold for a while. Still feels like a good time to bring back funds to the UK.
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