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.