European interest rates gone up?

[Guest pelmetman]

Whats likely to happen to the euro exchange rate (?)

[Dave225]

Logic suggests that a currency with a higher rate of interest will attract investors so is likely to rise against the Pound, which has been made weaker by not increasing its rate. However, as yet nothing much seems to have changed as the rate was pretty abysmal already. The arguement is that increasing our rate would affect exports but as a large chunk of our exports to the EU go to countries with little or no growth, and some facing Euro loans, then it is likely our export market will shrink as well.

 

What is possibly of more importance is what happens in the US because if it defaults on its loan packages then the proverbial will hit the fan for all.

 

Bluntly for us poor tourists work on an even exchange rate and anything better is a bonus. Back to beans on toast for meals again methinks. On the brighter side, if there is one, is that imports could get more expensive if the Pound drops, and that will affect prices here, so being 'over there' may not be as bad as you first thought. It will just hurt when you come home.

 

Sorry, but I do not have a magical answer.

[cheetahdavie]

Rates will rise..as and when Germany or the European Bank decides to make them do so. [WW3 was won without a fight?We joined the EEC?]

Germany has growth,low inflation,and is extremely competitive in the labour /technologic markets.Many Germans must be totally fed up with bailing out the 2nd tier in the EEC..[uK included]

The £ needs to fall to about $1.3=£1..and the Euro to £1=£0.85 euros to ensure we are in the game.Our current interest rates should be around 5%..not the silly one it is now.Yes..those with Mortgages will scream..but they are currently propped up by us `poor` sods who get zilch for our investments.