Weekly US$ exchange rates 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 US$ is sitting at US$2.027/£1 inter bank. The Fed made a pre emptive strike by cutting interest rates by 0.50% which was higher than expected and has given some comfort to the market. However the US$ is going to be under pressure for the foreseeable future. There are significant economic problems and a recession is possible. Oil continues to hit all time highs. So I see no respite for the US$ in the short or medium term.