Sterling lost ground against everything this week. The Bank of England cut UK interest rates by 0.25%. A slight surprise but on the back of weak economic data, including falling house prices and poor retail sales, better to start the cuts earlier rather than too late. There will be further reductions in UK interest rates next year. Will lead to weakness in the short term but longer term probably a plus for sterling.
The US$ made gains last week and now sits at US$2.033/£1 inter bank which is close to 4 month highs against sterling. A slight surprise given that the Fed is expected to cut US interest rates next week and the US economy is far from booming. In fact given the over hang in unsold properties, new and old, further problems are only a matter of time. In fact one of the major US property developers sold a significant proportion of its unsold new properties to a finance house for 40 cents in the US$1. Better to have the cash. Not a bad sentiment all round.
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