Weekly US Dollar 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.

 

Sterling continued to hit 26 year ever increasing highs against the US$ [US$2.056/£1]. The Fed Chief made his presentation to Congress and the previous rhetoric that the sub prime mortgage melt down was unlikely to affect the rest of the market was missing. So this has led to further weakness in the US$. However the US balance of payment deficit was easily funded which seems to indicate that certain parties may be "hoping" that the end of the US$ weakness is in sight.