Pound hits another new high (26-year-high)

Pound hits another new high

http://business.guardian.co.uk/story/0,,2117400,00.html?gusrc=rss&feed=24

Angela Balakrishnan
Tuesday July 3, 2007
Guardian Unlimited

The pound edged to a new high during early trading today, as investors await a widely expected interest rate rise by the Bank of England later this week.

Sterling ticked up to $2.0197 from yesterday's 26-year-high of $2.0174 before settling down around the $2.0168 level.

Interest rates in the UK - already the highest among the Group of Seven countries, are expected to rise by a quarter-point to 5.75% on Thursday.

This would be the fifth rise in just under a year. Markets are pricing in a further hike by the year-end.

The forecasted rate hikes are increasing demand for sterling by investors seeking returns from high-yielding currencies.

Meanwhile, the US Federal Reserve is expected to continue holding rates this year at 5.25%, with markets even pricing in a small chance of a cut. This is also helping to boost the pound against the dollar.

Edited 1 time(s). Last edit at 07/03/2007 01:22PM by regli.