I was surprise to find that the Pound Sterling had its worst year since 1992. The weighted exchange rate index has fallen 6.7% in the past 6 months. The reason is that I mostly look at the value of the Pound compared to the dollar. Of course, with the recent weakness of the dollar, the pound has been relatively strong - reaching a peak of $2.10 a few months ago.
However, against the Euro and other currencies such as the Yen and Australian Dollar the Pound has been much weaker. This reflects the growing concern over the UK economy in 2008. (sticky inflation forecast for UK economy) In particular there are expectations that in 2008, interest rates will fall. This and other reasons for the falling value of the Pound are discussed here - falling Pound Sterling

By the end of 2008, forecasts for the £ to $ look to be $1.80. It will be interesting to see how long the strength of the Euro can be maintained. Some worry that a permanently strong Euro could dampen growth in the Euro zone. Falling Dollar and Recession in Euro Zone

Amidst all the weakness in the dollar and OECD economies it looks to be another good year for commodities - Outlook for commodities in 2008