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Pound touches 14-year dollar high | Pound touches 14-year dollar high |
(about 3 hours later) | |
The pound has hit a 14-year high of $1.9938 against the dollar, with many experts believing it will rise above $2 in the next few days. | The pound has hit a 14-year high of $1.9938 against the dollar, with many experts believing it will rise above $2 in the next few days. |
Sterling has been rising against the dollar as the UK's economic performance contrasts with fears of a US slowdown. | Sterling has been rising against the dollar as the UK's economic performance contrasts with fears of a US slowdown. |
The trend has been good news for British visitors to the US but has made life more difficult for exporters. | The trend has been good news for British visitors to the US but has made life more difficult for exporters. |
The pound was last equal to $2 in 1992, the year the UK was forced to leave the European Exchange Rate Mechanism. | |
Inflation monitor | Inflation monitor |
The pound fell back slightly to $1.9900 in later trading, while the euro neared its all-time high against the dollar. | The pound fell back slightly to $1.9900 in later trading, while the euro neared its all-time high against the dollar. |
Inflation data being published in the UK and US on Tuesday could put further upward pressure on the pound, potentially pushing it above $2. | Inflation data being published in the UK and US on Tuesday could put further upward pressure on the pound, potentially pushing it above $2. |
With the UK housing market showing little sign of slowing down and inflation well above the government's 2% target, experts predict a further rise in interest rates before too long. | With the UK housing market showing little sign of slowing down and inflation well above the government's 2% target, experts predict a further rise in interest rates before too long. |
For casual tourists I think it has had an effect Mark Henderson, Gieves and Hawkes | For casual tourists I think it has had an effect Mark Henderson, Gieves and Hawkes |
In contrast, the US housing bubble has burst in recent months and weakness in the manufacturing sector means that further rate rises there are seen as unlikely. | In contrast, the US housing bubble has burst in recent months and weakness in the manufacturing sector means that further rate rises there are seen as unlikely. |
Higher interest rates tend to support a currency by making certain types of investment more attractive to traders. | Higher interest rates tend to support a currency by making certain types of investment more attractive to traders. |
Tourist concern | Tourist concern |
The current situation gives British visitors to the US much more buying power. | The current situation gives British visitors to the US much more buying power. |
Leading airlines have reported strong demand for US flights in recent months as people seek to exploit the favourable exchange rate to go on holidays and shopping trips. | Leading airlines have reported strong demand for US flights in recent months as people seek to exploit the favourable exchange rate to go on holidays and shopping trips. |
But the situation is worrying the UK tourist industry which is heavily reliant on free-spending US visitors over the summer. | But the situation is worrying the UK tourist industry which is heavily reliant on free-spending US visitors over the summer. |
The situation is not such good news for the British tourist industry | The situation is not such good news for the British tourist industry |
British firms with a large number of US customers are also beginning to feel the pinch. | British firms with a large number of US customers are also beginning to feel the pinch. |
"For casual tourists I think it has had an effect and we are beginning to see a bit of a dip," said Mark Henderson, chief executive of bespoke tailors Gieves and Hawkes. | "For casual tourists I think it has had an effect and we are beginning to see a bit of a dip," said Mark Henderson, chief executive of bespoke tailors Gieves and Hawkes. |
"If it goes beyond $2, it could become quite tough." | "If it goes beyond $2, it could become quite tough." |
One City analyst said the strong momentum behind the pound was set to continue. | One City analyst said the strong momentum behind the pound was set to continue. |
"There is every chance that the higher volatility we are likely to see this week will take us above $2," said Martin Slaney, currency expert at GFT Global Markets. | "There is every chance that the higher volatility we are likely to see this week will take us above $2," said Martin Slaney, currency expert at GFT Global Markets. |
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