Pound Surges Against Euro

Just when parity seemed like an inevitable conclusion, the pound has reversed the trend and yesterday posted its largest ever one-day gain against the euro.

The reason? Ideas that recent ECB rate cuts have been insufficient, whilst the BOE has been more aggressive with its rate reductions.

The ECB meets next week to discuss further possible cuts, with a reduction of a half point to 2% seen as highly likely.

But it's not all sunshine & roses for sterling either, UK house prices fell by 15.9% last year, according to the latest survey by the Nationwide building society.

It says prices fell by another 2.5% in December taking the average house price down to £153,048 - £29,000 less than a year ago.

The BOE is meeting this week, and it too is expected to cut interest rates again, probably by a half point also to an all-time low of 1.5%.

With UK, EU and US interest rates all so low the major central banks may soon have to start to focus on alternative ways of stimulating an economic recovery.

At 9.20am GMT the pound was worth 1.0933 euros, and a little over $1.47 against the dollar.