Sterling had a poor week. The Governor of the Bank of England stated that economic growth next year was going to be poor and that UK interest rates were going to be reduced. Retail figures were also poor and the net effect was that sterling lost ground against both the Euro and the US$. The market is wondering if UK interest rates could be reduced as early as December. Various economic figures out this week and we will have to wait and see what happens to sterling but a bit like the US$, sterling has few friends. We are in very interesting times.
The Cypriot £ [Cy£0.814 inter bank against sterling] is pegged to the € which is still top dog. This is more on the back of the poor economic fundamentals for the US and the UK. We have to remember that France and Italy were complaining about the strength of the € many months ago. So I suspect these economies are suffering even more. The housing markets in Spain and Ireland are also suffering. The European Central Bank is likely to keep interest rates on hold for a while to counter inflation and then is likely to have a significant affect on the Euro land economies. Has to be a good time to bring back Cypriot £'s to the UK.
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