No joy for sterling last week. The Bank of England cut UK interest rates by 0.25% which was as expected. However from the announcement which accompanied the cut the BOE warned that the credit problems were beginning to effect more than just the financial market. So where to from here. I suspect further weakness for sterling.
A quiet news week for the US$ last week. Gained a bit of ground against sterling which was on the back of the UK interest rate cut and sits at US$1.973/£1 inter bank. The markets see many similarities between the US and the UK economies. Housing market falling, heavily indebted consumers and balance of payment deficits. However the US has cut rates aggressively which suggests to the market that the US may be nearer the start of recovery. This may be slightly perverse but does have logic.
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