Thursday, 13 May 2010

Thursday, 13 May 2010

Sterling on the up

With the UK election finally over and a decision made as to who will form the British Government finalised, the relief within the financial markets was very evident. Mervyn King delivered the Bank of England’s quarterly Inflation report and made it very clear that UK interest rates will stay low for a considerable time to come due to the troubled rimes ahead. His boost for the new government was that he is enthusiastic about plans to start reducing the budget deficit as soon as possible. The Bank of England is clearly concerned that a delay in action would risk the UK losing its Triple A credit rating and that would have cost repercussions for the Bank and the Treasury. Whilst Sterling slipped a bit, the Euro also remained weak and there are fears that this decline could increase in pace in line with market scepticism over the effectiveness of the €uro rescue plan funding. Some analysts are predicting a further fall of 5 or 6 % in the Euro’s value against the US Dollar, although the UK government will have to start proving itself if Sterling is to keep pace. The Sterling - Euro exchange rate is hitting the highest levels it has achieved since June 2009 and a break above 1.19 € would offer the best levels since the collapse that started with the fall of Lehman Brothers in October 2008. That is fantastic news for anyone moving to Europe, although it is not such great news for those with Euros to sell. However, those sellers have had 20 months of advantageous rates and it now looks like it is the turn of the buyers. Peter Elias (Agent Commercial)http://www.allez-francais.com
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