Weekly US$ rates and comments - week commencing 29th September 2008

In a steadier week on the markets sterling stayed within a relatively small range against most major currencies. Edging up slowly throughout last week, then faltering late on Thursday to recover again to similar levels on Friday afternoon. The damage to sterling on Thursday was much owed to the increased likelihood of the Bank of England cutting UK interest rates soon. A second member of the BoE committee made comments supporting such a move and although cuts will undoubtedly happen, the timing is unknown, especially as the full extent of the credit crunch is yet to be felt.

 

American business was still very much at the centre of attention last week. Issues regarding the colossal bail-out scheme for the financial sector in the US have dominated the headlines and put pressure on a shaky US$. Though the talks seemed to have stalled and the rescue-plans for the economy are still being formulated, the US$ smacks of a high-risk investment and a new ‘gold-rush’ is beginning as investors look to amass safe-haven reserves.