Weekly Cypriot £ rates and comments - week commencing 3rd December 2007

 

Sterling had another steady week. The Bank of England is giving mixed messages. It is concerned about inflation but at the same time concerned about the slowing UK economy. House prices are falling while fuel costs are going up. The market is confident the BOE will cut UK interest rates but is unsure when. Some are expecting a cut as early as the next BOE meeting in early December. We will have to wait and see. As noted previously sterling is fairly friendless.

 

The Cypriot £, which is pegged to the €, has also had a steady week and sits at Cy.£0.809/£1 inter bank. Obviously still reasonably close to four and half year highs against sterling and is unlikely to weaken in the short term against sterling. As noted previously though the strong € is hurting Euro land exports. Euro land housing markets are also suffering. One meeting last week with a Spanish property developer highlighted how weak the Spanish housing market is. I'm sure this weakness applies elsewhere in Euro land. Good time to bring Cypriot £'s to the UK.