Sterling Looks For Relief

The domestic outlook remains extremely weak, but increased global fears and aggressive interest rate cuts will provide a significant degree of Sterling protection.

The UK currency was unable to regain the 1.50 level against the dollar on Thursday and weakened to lows below 1.48. Sterling also weakened to lows beyond 0.8450 against the Euro as confidence remained extremely fragile.

There will still be strong expectations of a further Bank of England interest rate cut of at least 0.50% at the December meeting, especially with global central banks still looking to cut rates aggressively to alleviate the severe conditions. The strong downward trend in global rates and economic fears should provide some degree of relative protection to the UK currency.

Conditions within the financial sector will be watched very closely as the relative prospects across the major financial sectors will be an important determining factor exchange rates. Sterling will need firm evidence of stability in the banks to make significant headway. As global risks remained dominant, Sterling edged back towards 1.50 against the dollar on Friday

Investica
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