Weekly US Dollar Rate & Comments - 16 July 2006

Limited UK economic information released in the last week or so and as such sterling's position against other currencies has been influenced by what is happening elsewhere rather than here. 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. So it will be interesting to see the minutes of the last Bank of England meeting and what their view is and how close last times vote was when they increased UK interest rates.

Sterling continues to hit ever increasing 26 year highs against the US$ [US$2.047/£1]. The US retail figures announced at the end of last week were poor showing that the slump in US housing was feeding through to the retail sector. US interest rates are expected to be kept on hold. The US$ is likely to remain under pressure for a while.