Weekly US$ rates and comments - week commencing 5th January 2009

Due to the holiday season, there was very little in terms of market data out last week. However sterling did stumble to yet another record low against the euro early on before rallying by about 2% on Wednesday back up to the previous week's levels. The Nationwide Building Society announced that as well as house prices having fallen by over 16% in 2008 that they will now be activating a clause in the contracts for their 'tracker' mortgages meaning that further cuts in interest rates will definitely not be passed on should the Bank of England lower interest rates again in the coming months. This demonstrates a clear expectation by Nationwide for interest rates to be lowered further and is likely to lead to other major players in the lending sector to follow suit. Consumer confidence has been rocked by the fall-out of the credit crisis so far but a refusal to pass on the savings on interest by the banks whom have been blamed for creating the mess will surely cause further upset.

 

Sterling's price against the US$, currently at 1.451/£1, blipped in the middle part of December but has subsequently continued the trend of hitting multi-year-lows and closed last week moving toward the £0.70/$1USD mark. Market data released last week showed consumer confidence had fallen in the US substantially below expectations but a marked improvement on the estimates for unemployment saw the US$ have a mixed week. One matter of interest for this week will be the Federal Reserve's Janet Yellen who speaks on fiscal policy in San Francisco on Sunday.