Sterling had another steady week. The Bank of England is giving mixed messages. It is concerned about inflation but at the same time concerned about the slowing UK economy. House prices are falling while fuel costs are going up. The market is confident the BOE will cut UK interest rates but is unsure when. Some are expecting a cut as early as the next BOE meeting in early December. We will have to wait and see. As noted previously sterling is fairly friendless.
The US$ also had a steady week and is now sitting at US$2.056/£1 inter bank. The feeling is that the Fed will cut interest rates in December. Even in spite of some negative US economic data this week and the likely cut in US interest rates the US$ seems relatively well supported. However, don't expect the US$ to make any significant gains any time soon. Short term weakness could be more likely as we approach the expected cut in US$ interest rates.
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