Weekly US$ rates and comments - week commencing 15th October 2007

 

Sterling didn't have a great last 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 last week.

 

The US$ sits at an inter bank rate of US$2.040/£1.The US$ has benefited from a reduction in their balance of payments deficit which indicated a pick up in exports. This isn't surprising given how the US$ has weakened against the Euro. The Fed is still worried about inflation and therefore will need to ensure that interest rates are not reduced too quickly. I still don't expect a major upside for the US$ short to medium term.