Weekly Cypriot £ rates and comments - week commencing 29th October 2007

 

 

Not a great week for sterling losing ground it seems against everything apart from the US$. The Bank of England warned that the UK remained vulnerable to shocks from the global credit squeeze which isn't a surprise and certainly wasn't a help to sterling. The housing market continues to suffer here in the UK with a significant reduction in mortgage approvals and it appears to be a buyers market. Also the market is beginning to believe that UK interest rate reductions are likely sooner rather than later. A period of uncertainty for sterling.

 

The Cypriot £, which is pegged to the €, is still on the up. Economic data out of Euro land has been reasonable and as such both sterling and the US$ are losing ground. The Cypriot £ sits at Cy.£0.830/£1 inter bank. However, the Euro zone is slowing with even Germany reducing its growth forecast for 2008 from 2.4% to 2.0%. The European Central Bank is unlikely to reduce € interest rates in the short term as it is concerned about inflation and as such this will benefit the Cypriot £ given the expected interest rate cuts elsewhere. Still seems like an excellent time to repatriate Cypriot £ funds.