Weekly US$ rates and comments - week commencing 6th October 2008

Sterling left it late in the week but gained sharply against the euro on Friday. The pound surged to its highest levels for some months largely thanks to an injection of £40bn from the Bank of England to help with the liquidity issues which are causing so much turmoil in the UK financial sector. There will be great interest to see what the Bank of England will do with their decision on UK interest rates this week as recent speculation has suggested a cut, or even a series of cuts, may well be imminent.

 

The US$, currently at 1.752/£1, maintained its recent levels against most major currencies last week in spite of the wrangling within the House of Representatives over the $700bn rescue plan from the US government. It took George Bush to go on record and personally reassure the people of America that he would see the bill passed and attempt to shore up a distinctly wounded financial sector. Dubbed the 'Emergency Economic Stabilisation Act of 2008' and until the finer points are known it will be impossible to tell quite whether this will resolve much of the current crisis but it has already put much needed confidence back into the future health of the US economy.