(U.K. Pound) Sterling heading for $2 barrier (BBC News)

[Up2Late]

Sunday, 6 August 2006, 14:09 GMT 15:09 UK

Sterling heading for $2 barrier

The shock rise in UK interest rates last week has sent the pound jumping higher against the dollar and other currencies, a trend that may continue.

Pound Sterling - United States Dollar
http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/currency/11/12/img/77+X_SGBPUSD+bbc-big_thick-line+twelve_month.png
(Market data at this link) <http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/currency/11/12/twelve_month.stm>

Sterling rose more than two cents to $1.91 on Friday, a 15-month high. Analysts think the pound could near the two-dollar mark in coming months as investors pile into the currency.

They expect the Bank of England to raise rates even further from their current 4.75%, presenting a good yield for those buying into the pound. Sterling has also risen against the euro and the yen, helped by the fact that UK interest rates are higher than those in Japan and the European Union....

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...At the same time as the pound is becoming more attractive to currency traders, the dollar is losing its appeal - partly because the US Federal Reserve is expected to pause its cycle of raising interest rates....

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Currency traders have been switching their reserves out of the dollar in the belief that the Fed may hold steady, or if it does raise rates again, signal that it will stop there....

(more at link) <http://news.bbc.co.uk/2/hi/business/5250250.stm>

[Deja Q]

1. If only more jobs came back to the US, this problem would be reduced.

Oh well.

[Ghost Dog]

2. IMO this could well be highly feasible,

since the UK doesn't manufacture or cultivate much worth exporting any more (beyond financial services and tourism), and imports far more (so a strong pound would help reduce the trade deficit, temper energy price-rises, etc.). Most of the UK's wealth is in its land and house and office values, and in order to prevent that market crashing people require some kind of feelgood factor, such as, when they go on holiday elsewhere in the world, letting them feel relatively rich.

A strong pound would also allow City of London financiers to invest in, for example, scarce and in-demand commodities, viable businesses with interesting futures, and maybe even other peoples' interest-paying (in Sterling) debt on favourable terms.

[w4rma]

8. And the US doesn't manufacture or cultivate much worth exporting any more

(beyond financial services and tourism), and imports far more (so a strong dollar would help reduce the trade deficit, temper energy price-rises, etc.). Most of the US's wealth is in its land and house and office values, and in order to prevent that market crashing people require ... huh? Wait the dollar is becoming more worthless compared to other currencies as opposed to the pound which is going the opposite direction.

Maybe the difference is the national debt of the two countries. The UK isn't in debt. The US is.

[nosillies]

3. I choose to look on the bright side

My in-laws will be here from England in a few weeks. When the exchange rate is good for them and they have lots of spending power in America, they usually buy us something we need for the house and/or pay for the meals out.:evilgrin:

[medeak]

4. thank gawd my son moved back to US in June

he was living on beans and rice in London for a year

[nosillies]

5. I was so poor when I lived there, also.

I made it better by pretending I was bohemian.:D

[BooScout]

6. Waaaaah.....

I still have money in the States I need to bring over to the UK. I am hoping for a miracle.:-(

[Up2Late]

7. Here's today's Intra-Day Chart

Pound Sterling - United States Dollar
http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/currency/11/12/img/77+X_SGBPUSD+bbc-big_thick-line+intraday.png

<http://newsvote.bbc.co.uk/2/shared/fds/hi/business/market_data/currency/11/12/intraday.stm>

[BooScout]

9. You're killing me here.

:hurts: