Change from the Cypriot £ to the Euro - as of 1st January 2008

 

As of Tuesday the 1^st January 2008 the Cypriot £ will no longer exist. In its place will be the Euro. For weekly updates and comments on the Euro please go to:

 

http://smartcurrencyexchangeeuro.blogspot.com

Weekly Cypriot £ rates and comments - week commencing 24th December 2007

 

Sterling has had a bad week. First the minutes of the last Bank of England interest rate meeting were released and showed that the vote to reduce interest rates was unanimous. This surprised the market. Then the balance of payment figures were released. These were very bad with a huge net outflow of funds from the UK. And now the Christmas retail period is not going as well as hoped and house prices continue to fall in most places. All doom and gloom so it is not a surprise that sterling is suffering. Sterling only seemed to make a gain against the South African rand. Shows how the market views the new head of the ANC in South Africa! But I suppose they did win the rugby world cup.

 

 

The Cypriot £, which converts to the € next week, sits at Cy.£0.805/£1 inter bank. Inflation continues to be of concern to the European Central Bank. So any cuts in € interest rates are very unlikely short to medium term. But clearly the credit crunch is having an affect on Euro land as the ECB lent €350 billion to financial institutions last week who were having difficulty borrowing elsewhere. And I still feel that Euro land cannot be immune to the slow down elsewhere. Talking to one of my clients who does a lot of business in Euro land he said there was a lot of pain being suffered by Euro land exporters given the strong € exchange rate. So this is the very last note on the Cypriot £. From next week the Euro is the currency of Cyprus.

 

ALL THE VERY BEST FOR 2008.

Weekly Cypriot £ rates and comments - week commencing 17th December 2007

Sterling has been steady and has gained against most currencies apart from the US$. Economic news has been mixed with pressure on house prices and sales volume countered by a surge in production price inflation. The latter means that the market has become unsure on future cuts in UK interest rates. The central banks of the UK, US and Euro land agreed a financing package in an attempt to add liquidity to a market that was/is in danger of grinding to a halt. Still uncertain times and an uncertain future for sterling.

 

 

The Cypriot £, which is pegged to the € which is still the preferred currency when the choice is the US$ or sterling, sits at Cy.£0.809/£1 inter bank. And inflation is also of concern to the European Central Bank. So any cuts in € interest rates are very unlikely short to medium term. But clearly the credit crunch is having an affect on Euro land as the ECB were part of the consortium noted above. And Euro land cannot be immune to the slow down elsewhere. They may not have the overhang of highly priced properties throughout Euro land but businesses need to export and if elsewhere is contracting and the strong € makes these exports less competitive then the € will suffer. Please can all readers note that as of the 1^st January 2008 the € will become the official currency of Cyprus.

Weekly Cypriot £ rates and comments - week commencing 10th December 2007

Sterling lost ground against everything this week. The Bank of England cut UK interest rates by 0.25%. A slight surprise but on the back of weak economic data, including falling house prices and poor retail sales, better to start the cuts earlier rather than too late. There will be further reductions in UK interest rates next year. Will lead to weakness in the short term but longer term probably a plus for sterling.

 

 

The Cypriot £ sits at Cy.£0.808/£1 and is pegged to the € which is still the flavour of the month. The European Central Bank kept Euro land interest rates on hold and even inferred that inflation was still their major concern. Clearly they are dancing to a different beat in Euro land relative to the UK and the USA. I wonder how self delusional the ECB's position is. France and Italy have been complaining about the strong € since the summer and as noted previously the Irish and Spanish property markets are suffering. I still believe sterling is oversold and that it is a good time to bring back Cypriot £'s. We will have to wait and see if I am right.

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.

Weekly Cypriot £ rates and comments - week commencing 26th November 2007

 

 

Sterling had a steady week. The Bank of England minutes were released last week which showed there had been a 7 to 2 vote in favour of keeping UK interest rates on hold. The UK economy is certainly slowing but that is no different from others. Property prices are softening. There will be reductions in UK interest rates next year but we will also see reductions in interest rates elsewhere. Sterling continues to be fairly friendless.

 

The Cypriot £, which is pegged to the €, sits at Cy.£0.808/£1 inter bank. Although Euro land has some significant economic positives when compared to the UK and US it won't have it all its own way. The German economy is slowing and the strong € has seen a lot of European industry begin to suffer and worry. Airbus viewed the current strength of the € against the US$ as company life threatening! The housing markets in Spain and Ireland are also in trouble. The European Central Bank is likely to keep interest rates on hold for a while to counter inflation but this is likely to have a significant negative affect on the Euro land economies. Has to be a good time to bring back funds to the UK.

Weekly Cypriot £ rates and comment - week commencing 19th November 2007

 

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.

Weekly Cypriot £ rates and comments - week commencing 12th November 2007

Sterling had a mixed week losing ground against the Euro but gaining against other currencies such as the US$ and the high interest rate currencies such as the Australian $. The Bank of England kept UK interest rates on hold which was expected and we now wait for the minutes of the meeting to see what the emphasis of the meeting was and how close the vote was for keeping or reducing UK interest rates. UK data including house prices and trade figures were on the weak side and as such were a driver in the fall of sterling against the Euro. A lot of UK economic information out this coming week which will make interesting reading with regards to inflation as this will be a significant driver for UK interest rates.

 

The Cypriot £, which is pegged to the €, is still top dog and against sterling sits at Cy.£0.831/£1 inter bank. The European Central bank kept € interest rates on hold and the market expects this to be the case for a while as the ECB battles inflation being over target and a strong € exchange rate which dampens exports. However, the strong € has increased the downside risks to growth significantly and as such there will be a moment in time when the other currencies become stronger but don't expect this any time soon. Still a good time to bring Cypriot £'s back.

 

 

Weekly Cypriot £ rates and comments - week commencing 5th November 2007

 

 

Sterling did okay this week. Various members of the Bank of England made comments that the UK was suffering a slowdown rather than anything worse [at this time] and this has led the market to believe that any UK interest rate cuts are unlikely until next year. This has lent some support to sterling which has gained against nearly every currency apart from the all conquering Canadian $ [C$1.954/£1 inter bank]. Although the UK housing market is less robust than it was, house prices "apparently" increased in September. I am slightly sceptical about these figures but it does indicate that we are not in the same dire straights that the US finds itself in.

 

The Cypriot £, which is pegged to the Euro, lost a bit of ground and is sitting at Cy. £0.837/£1 inter bank. Euro land interest rates are unlikely to be reduced any time soon especially as inflation is sitting at 2.6%. However, the Euro land economy is being squeezed and we are unlikely to see any increases in Euro land interest rates. Euro land was slowest to increase interest rates and is likely to be the slowest to reduce them! Still a good time to repatriate your Cypriot £'s

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.

Cypriot £ rates and comments - 22nd October 2007

 

Sterling is holding its own. The minutes of the last Bank of England meeting were released and the vote had been 8 to 1 to keep UK interest rates on hold. The credit crunch was obviously a concern but inflation is still a worry to the BOE. The last inflation figure of 1.8% was within the 2% target and we now wait for the next inflation report in November. New mortgages are slowing down as the UK housing market begins to slow.  Still difficult to see much upside for sterling short term.

 

The Cypriot £, which is pegged to the €, is still benefiting from a positive flow of economic data in Euro land and the "underperformance" of both sterling and the US$. The current inter bank rate is Cy.£0.835/£1. One problem that will ultimately have a major effect on the Cy.£ is the appreciation of the € against the US$ which will make Euro lands exports less competitive than those from the US. The French continue to complain about the strong €. In the space of 18 months the € has gained 20% against the US$. How is Airbus able to compete with Boeing when Boeing have gained a 20% cost advantage doing nothing! So don't assume that the Cy.£ will continue to move in one direction only. Seems like a good time to bring funds to the UK.

Weekly Cypriot £ rates and comments - week commencing 15th October 2007

Sterling didn't have a great week or so losing a little bit of ground against most currencies. No clear reason why this should have been the case and I think it was more likely a situation of better news elsewhere. The UK housing market seems to be slowing which will affect consumer confidence. We also wait for the minutes of the Bank of England minutes which will, hopefully, give a clearer picture of how they view the economy, inflation and interest rates. I suppose we should be pleased that there have been no further "Northern Rocks" this week.

 

The Cypriot £, which is pegged to the Euro, sits at an inter bank rate of Cy.£0.835/£1 and continues to benefit from strong economic data and not just from Germany. French and Italian industrial data has also been good. It has to be remembered that a lot of exports head east rather than west. The economies of India, Russia and China are all on the up and as such imports from Euro land are not, at this stage, being unduly influenced by what is happening to the US$/Euro exchange rate. The Cypriot £ is likely to have the upper hand for a while and seems like a good time to bring funds back.

Weekly Cypriot £ rates and comments - week commencing 8th October 2007

 

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.

Weekly Cypriot £ rates and comments - week commencing 1st October 2007

 

No major negative news last week to hurt sterling. In fact the Bank of England made £10bn available in short term funding and there were no takers. However the sight of queues outside of a British bank with savers desperately trying to get their money out has not inspired confidence. All in all a major mess created by the BOE and the Government. The BOE meets this week and we wait to see if they hold firm on interest rates or follow the example of the Fed and cut interest rates. The market expects them to hold firm. It will take a while for sterling to make a significant recovery especially against currencies such as the Euro. It certainly seems a good time to bring funds back to the UK.

 

The Cypriot £ which is pegged to the Euro has weakened slightly from it highs of early last week to Cy.£0.835/£1 inter bank. Euro land economic data on the whole has been positive with German unemployment down, euro zone money supply growth remaining strong and inflation data making Euro interest rate cuts highly unlikely. However the strength of the € against the US$ means that exports are beginning to suffer and business confidence is weakening. However, the Cypriot £ is likely to remain strong for the short to medium term.  Sterling has regained some stability over the last ten days against the Cypriot £ but upside seems somewhat limited in the short term.

Weekly Cypriot £ exchange rate and comments - week commencing 24th September 2007

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 UK.

 

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 UK especially when compared to the exchange rates of two weeks ago.

 

Cypriot £ comments - week commencing 17th September 2007

Northern Rock did for sterling. Even though Northern Bank is profitable it got caught by having short term funding to cover long term loans to clients. Given the credit crunch it found it very difficult to borrow from the inter bank market. Other banks are having to hoard cash for the huge amounts of funds they have lent to large private equity deals and which they are unable to on sell to other financial institutions. Hence the need for the Bank of England to supply short term funding to Northern Rock. Sterling had been falling ever since the BOE decided to hold UK interest rates at its meeting in early September. I suspect that the situation has been over dramatised and that sterling is oversold but it may well take time for sterling to recover.

 

The Cy.£, which is pegged to the €, is in the ascendancy hitting Cy.£ 0.829 inter bank. The European Central Bank still believes that the Euro interest rate is too low and this has led the market to believe that interest rates will be increased by at least 0.25% by year end. The Euro land economy is still robust and the Cy.£ has gained over 3 cents against sterling in just over week. This is a very significant appreciation and may be relatively short lived and as such could well be a good time to sell Cypriot £'s.

 

 

Weekly Cypriot £ rates and comments - week commencing 10th September 2007

 

We still live in interesting times. The banks are very cautious about lending to each other as they are still unsure where the losses relating to the bad US home loans finally end up. Also the banks are having to hoard cash as they are likely to find it very difficult to offload all the debt they have taken on funding the numerous private equity deals we saw in the first half of this year. In the midst of this uncertainty the Bank of England took the prudent approach and kept interest rates on hold. The BOE did take an unusual step by making an announcement stating that they were concerned about the credit markets and thought this uncertainty would dampen inflation in the short/medium term and this has led the market to believe that increased UK interest rates are also unlikely in the short to medium term. Since this announcement sterling has steadily lost ground against the Euro.

 

The Cypriot £ is pegged to the Euro and as the Euro has been the main beneficiary in the current climate we have seen the Cypriot £ strengthen to Cy.£0.854/£1. The European Central Bank did meet last week and the ECB held Euro interest rates. However the ECB did announce that it felt that interest rates were still too accommodative [i.e. too low] and therefore would need to be increased sometime. This increase is unlikely in the short term but was more bullish than the BOE's announcement on sterling. The Euro land economy still continues to move along nicely. However, it still has a degree of dependency on the US and that means that it will be concerned about what is happening in the US. Again would seem to make sense to buy Cypriot £'s when we see a bit of weakness from the Euro as it could well be short lived.

Weekly Cypriot £ rates and comments - 3rd September 2007

The markets became a bit calmer in the last few days as the news flow was less scary. But we shouldn't get complacent as I suspect there are still significant problems out there just waiting to see the light of day and when they do the markets will move very very quickly. Debt funding is going to be a problem for the medium term which is going to constrain growth. The Bank of England has not had to pump in the huge volumes of liquidity into the market place that the Fed had to in the US and the European Central Bank in Europe. This has enhanced the BOE's reputation but sterling is not looked at as a safe haven asset and as such will be under pressure when problems arise. The BOE meets this is week and is expected to keep interest rates on hold.

 

A bit of strength for sterling against the Cy.£ towards the end of the week and it has pushed up to Cy.£0.86/£1 inter bank but please remember this is the holiday season and volumes are low. The Cy.£ is pegged to the Euro and as such is greatly affected by the Euro. The German banks have suffered greatly from the problems with sub prime loans being significant buyers of the securitized sub prime debts that were distributed around the world and have proved to be near enough worthless. We have truly become a global market and this has increased the volatility resulting from the recent credit crunch. The European Central Bank is meeting this week. It had indicated at the press conference following the last meeting that it would raise € interest rates. However, this is now considered unlikely given the problems already noted. I would still consider buying on any short term weakness in the Cy.£, such as now, as it may be short lived.

 

Weekly Cypriot Pound Rates and Comments - Week Commencing 27th August 2007

Sterling had a better week. The markets have regained some equilibrium following the Feds move to reduce their lending rate to financial institutions. Also the ECB and the Fed continue to make available liquidity as and when required and in whatever size required. Any economic data released recently seems to have ignored. However, sterling will continue to be under pressure while the liquidity crisis continues and safe haven such as US treasury bills are preferred.

 

 

No real change for the Cypriot £. The Cypriot £ is currently sitting at Cy.£ 0.855/£1 inter bank. The Cypriot £ is pegged to the Euro. Less than a month ago the Cy.£ pushed up to towards Cy.£ 0.87. Then it pulled back close to Cy.£ 0.853. The ECB had made it clear that interest rates would be increased next month by 0.25%. However given the volatility in the market place and the need for the ECB to supply liquidity, the market is beginning to wonder if the expected increase in Euro interest rates will happen in the short term. However, we have to remember economically that Euro land continues to leave the UK in its wake. So if you see any respite for sterling against the Cy.£ then it may make senses to look at it as a short term buying opportunity.

Weekly Cypriot £ rates and comments - Week commencing 20th August 2007

 

Sterling continues to be under pressure. The liquidity crisis is having far reaching consequences. The flight to safety has focused on the Yen, the Swiss franc and the US$ in the form of treasury bonds. UK news focussed on the Consumer Price Inflation figure for July of 1.9% being for the first time in a while less than the target rate set for the Bank of England of 2%. Also the minutes of the last BOE meeting were announced and they showed a 9 to nil vote in favour on keeping UK interest rates on hold. The market now believes that UK interest rates will be kept on hold for a while and is even wondering if the market turmoil will negate the need for a further increase. As I noted at the start, sterling is under pressure.

 

The Cypriot £ is currently sitting at Cy.£ 0.856/£1 inter bank. The Cypriot £ is pegged to the Euro. It was only a couple of weeks ago that the Cy.£ pushed up to towards Cy.£ 0.87. At one stage, at the start of last week, we were close to Cy.£ 0.854. The ECB had made it clear that interest rates would be increased next month by 0.25%. However given the volatility in the market place and the need for the ECB to supply liquidity, the market is beginning to wonder if the expected increase in € interest rates will happen in the short term. However, we have to remember economically that Euro land continues to leave the UK in its wake. So if you see any respite for sterling against the Cy. £ then it may make senses to look at it as a short term buying opportunity.

Weekly Cypriot Pound Rates and Comments - Week commencing 13th August 2007

 

Sterling had a strange start to last week losing a cent and half against the Euro very first thing Monday morning. The explanations as to why the sudden movement happened have been somewhat limited especially given the lack of sterling negative news over the weekend. At the same time, there was a rapid decline in the US$ against the Euro. There has been a partial recovery in sterling during the course of the week but it would seem that sterling is now being identified as a high risk rather than a safe haven asset and, as such, is moving in line with the US$ dollar against the Euro. The flight to safety has been brought about by high volatility in the equity markets and the credit crunch in the debt market which are making investors very nervous.

 

The Cypriot £ is currently sitting at Cy£ 0.860/£1.The Cypriot £ is pegged to the Euro. It was only a couple of weeks ago that the Cy£ pushed up to towards Cy£ 0.87. At one stage, at the start of the week, we were close to Cy£ 0.854. The ECB has made it clear that interest rates will be increased next month by 0.25%. Even though the Euro is very strong against the US$, the German economy is still growing and, as the economic powerhouse of Europe, it means that Euro land is on the up. The strengthening of the Euro against the US$ and sterling was much quicker than anyone could have forecast and we wait to see if it can be sustained.

Weekly Cypriot £ Rates and Comments - Week commencing 13th August 2007

Sterling had a strange start to last week losing a cent and half against the Euro very first thing Monday morning. The explanations as to why the sudden movement happened have been somewhat limited especially given the lack of sterling negative news over the weekend. At the same time, there was a rapid decline in the US$ against the Euro. There has been a partial recovery in sterling during the course of the week but it would seem that sterling is now being identified as a high risk rather than a safe haven asset and, as such, is moving in line with the US$ dollar against the Euro. The flight to safety has been brought about by high volatility in the equity markets and the credit crunch in the debt market which are making investors very nervous.

 

The Cypriot £ is currently sitting at Cy£ 0.860/£1.The Cypriot £ is pegged to the Euro. It was only a couple of weeks ago that the Cy£ pushed up to towards Cy£ 0.87. At one stage, at the start of the week, we were close to Cy£ 0.854. The ECB has made it clear that interest rates will be increased next month by 0.25%. Even though the Euro is very strong against the US$, the German economy is still growing and, as the economic powerhouse of Europe, it means that Euro land is on the up. The strengthening of the Euro against the US$ and sterling was much quicker than anyone could have forecast and we wait to see if it can be sustained.

 

Think Smart,

 

Charles Purdy
Director

 

Tel:  44 (0) 207 898 0541
Fax:  0870 285 0365
http://www.SmartCurrencyExchange.com

 

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Weekly Cypriot £ Rates and Comments - 6th August 2007

The Bank of England held UK interest rates at last weeks meeting. This was no surprise given the BOE increased rates at the previous meeting, the significant volatility in the equity markets and the major floods in certain parts of the UK in the last month or so. Sterling is still holding its own and the market still expects that we will see at least one further increase in UK interest rates by Christmas.

 

The Cypriot £ [Cy£0.857/£1] is pegged to the Euro. Therefore where the Euro goes the Cypriot £ follows. The European Central Bank kept Euro land interest rates on hold this week but come September the markets expect interest rates to be raised by at least 0.25%. This will support the Euro and Cypriot £ short term. However the Euro is still very strong against the US$ which is hurting Euro land exporters and as such we can expect pressure on the ECB to moderate their increases in interest rates. In fact France has been very vocal in wanting interest rates to be reduced.

Weekly Cypriot Pound Rates and Comments - Week Commencing 30th July 2007

Sterling has enjoyed a roller coaster week, hitting yet more 26 year highs against the US$, pushing close to €1.50 and then losing strength towards the end of the week following evidence that the UK housing market was beginning to slow thereby suggesting that the need for further UK interest rate rises in the near term were diminishing.

 

The Cypriot £, which is pegged to the Euro, suffered at the start of the week when it pushed close to Cy. £0.87/£1 inter bank. We are now back at a more "normal" exchange rate of Cy.£ 0.86/£1 inter bank. German business confidence is weakening on the back of the strong Euro against the US$. As the German economy is the key driver for the Euro land economy this is not a positive sign. However, the UK economy must also be suffering from a strong £ against the US$ and so we should not assume that sterling will move back towards Cy.£ 0.87/£1 any time soon.

Weekly Cypriot Pound Rates and Comments - Week Commencing 23rd July 2007

At their last meeting the Bank of England voted by six votes to three to increase UK interest rates by 0.25%. The concern of the three was that we still needed to see what affect the previous increases had had on the UK economy before instigating further increases. They may well be right as UK retail shows some signs of slowing [although torrential rain probably doesn't help]. The general feel in the market is that a further increase of 0.25% is likely later this year but some commentators are now no longer as certain of this as they were.

 

The Cypriot £ [Cy£0.863/£1], which is pegged to the Euro, lost a bit of ground against sterling on the back of the Euro highs against the US$. This is even hurting industry in Germany so goodness knows what pain the French and Italians are having to endure.  However, the European Central Bank is expected to increase interest rates in September to keep on top of inflation so I suspect limited further upside for sterling unless there are some surprises around the corner.

Weekly Cypriot Pound Rates and Comments - 16th July 2007

The Bank of England Limited voted by 6 to 3 to increase UK interest rates at the their last meeting. There is still inflationary pressure in the UK system, which is being exasperated by increasing oil prices, and which will be difficult to curtail without even higher UK interest rates. Another increase in UK interest rates is expected by the end of the year.

 

The Cypriot £ has pushed up to CY£0.865/£1 inter bank. The Cypriot £ is pegged to the Euro and as such moves in line with the Euro vs. sterling. The Euro has been supported by upward revisions to first quarter gross domestic product growth and healthy industrial production in Euro land. The European Central Bank is expected to increase interest rates in September to keep on top of inflation.