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Soaring oil prices will start to affect economic activity (page 2 of 2)
- Saturday, August 21 - 2004 at 15:09
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Range for the week: 107.50 - 110.50
Sterling
The sterling slipped against the dollar at the start of the week as a rebound in U.S. capital inflows data lifted the greenback, while the pound still subdued by dwindling British interest rates hike after a survey suggested that higher interest rates are cooling Britain's red-hot housing market. The Royal Institute of Chartered Surveyors said house prices in British rose at their slowest pace in a year in the three months to July as higher borrowing costs led to a drop in new buyer enquires. The Bank of England has raised rates five times by a total of 125 basis points to 4.75 pct since November last year, partly to cool house price inflation and consumer borrowing.
As the week progressed, the pound lost further ground as the minutes from the Bank of England raised expectations that British interest rates might be close to its peak. The minutes reported that the BoE's Monetary policy Committee voted unanimously to increase interest rates by a quarter-point, but also that no committee member urged a 50-point hike. This suggests that the tightening cycle may be drawing to an end.
Next week, market will keep a close eye on Confederation of British Industry's August trends survey, second-quarter GDP and GfK consumer confidence figures for evidence to the outlook of UK interest rates.
Range for the week: $1.8000 - 1.8300
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HSBCSaturday, August 21 - 2004 at 15:09 UAE local time (GMT+4)
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