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| Version 2 | Version 3 |
|---|---|
| Pound hits 14-year dollar high | Pound hits 14-year dollar high |
| (about 5 hours later) | |
| The pound has hit a 14-year high against the dollar amid speculation that the Bank of England will raise interest rates in the New Year. | The pound has hit a 14-year high against the dollar amid speculation that the Bank of England will raise interest rates in the New Year. |
| The pound rose as high as $1.9696 on the currency exchanges, its highest level against the dollar since 1992, before slipping back slightly. | |
| Interest rate rises are now more likely in early 2007 after the Nationwide said house prices rose strongly in November. | Interest rate rises are now more likely in early 2007 after the Nationwide said house prices rose strongly in November. |
| UK interest rates are currently at 5%, after this month's quarter-point rise. | UK interest rates are currently at 5%, after this month's quarter-point rise. |
| By late evening, the pound was worth $1.9657, still up more than 1% on the day. | |
| Dollar weakness | Dollar weakness |
| The strong pound is good news for UK shoppers planning to travel to New York or other big US cities to buy their Christmas presents. | The strong pound is good news for UK shoppers planning to travel to New York or other big US cities to buy their Christmas presents. |
| Track the pound against the dollar | Track the pound against the dollar |
| However, it is bad news for UK exporters, as it means their products will be more expensive in the US. | However, it is bad news for UK exporters, as it means their products will be more expensive in the US. |
| While sterling has been boosted by recent UK interest rate rises, the dollar has been hit over the past weeks by poor US economic data. | While sterling has been boosted by recent UK interest rate rises, the dollar has been hit over the past weeks by poor US economic data. |
| Businesses in the US Midwest reported the first contraction in economic activity in more than three years on Thursday, putting further pressure on the currency. | |
| The pound is now at its highest level since so-called Black Wednesday in September 1992, when it crashed out of the European Exchange Rate Mechanism (ERM) under John Major's Conservative government. | The pound is now at its highest level since so-called Black Wednesday in September 1992, when it crashed out of the European Exchange Rate Mechanism (ERM) under John Major's Conservative government. |
| Worrying scenario | |
| The dollar also fell to a 20-month low against the euro. | |
| Despite this, US stock markets were relatively unaffected. The Dow Jones benchmark index dropped just 4.80 points. | |
| Investors said the scenario of rising interest rates across Europe and a slowing US economy, which makes further monetary tightening by the Federal Reserve increasingly unlikely, was hurting the dollar. | |
| "In the end, it is all about rates," said David Durrant, a senior currency strategist at Bank Julius Baer in New York. | |
| "Higher rates of return in Europe will push the dollar lower." |