Weekly US$ rates and comments - week commencing 8th September 2008

Chancellor Darling hardly inspired confidence at the start of last week describing the UK economy as being similar to the post war era of the late 1940's. Needles to say sterling began to lose value against most currencies. On Thursday, the Bank of England held UK interest rates. The BOE is still unsure what to do as it continues to worry about inflation while the economy falters. No sunshine on the horizon for sterling.

 

The US$, currently at 1.7735/£1, continued to gain significantly against sterling. Next stop US$1.75/£1. The US has had the advantage of cutting interest rates early on the basis that inflation was under control. Most people knew that this wasn't "true" but it now gives the US monetary authorities an advantage over the UK and Euro land in that they can't/don't have to cut interest rates to help the US economy. The US$ is on the ascendancy in the short term.