Weekly US$ rates and comments - week commencing 1st September 2008

 

Sterling continued to fall throughout the week and lost ground on most major currencies as the intensifying talk of recession, poor market data and bleak forecasts for the UK economy took their toll on the pound in the markets. The Nationwide house price figures released on Thursday and further confirmation from Land registry certainly added to these woes. The steepest decline in prices since 1991 (and the last recession on these shores) will do nothing to boost confidence in a UK economy in dire need of reviving.

 

The US$, currently at 1.8067/£1 having hit a two-year high against the pound last week, is maintaining its high levels despite inconsistent, and in some ways contradicting, market data and figures. A grossly undervalued US$ over the past year has been the quoted as one of the main forces behind such a dramatic turn-around for the world's reserve currency, but having seen the economy rebound to growth so unexpectedly and the prospect of several hikes in interest rates in the coming year will not have harmed its value at all.