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Sterling strengthens against dollar

Sterling strengthens against dollar

Category: Money

Updated: 01/06/2009
First Published: 01/06/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The pound has continued its recent resurgence against the dollar. It rose to its highest point against the currency since November last year for the second time in less than a week.

Against the backdrop of a weakening dollar, one pound sterling rose to $1.6288, its highest level for seven months.

As recently as January, the pound was worth just $1.36, its lowest level against the American currency for two decades.

As the pound has risen in line with equity markets, investors have moved away from the dollar, with the latter viewed as a safe investment. The dollar is struggling as investors act on growing confidence within the global economy, switching to the pound and the euro, which both offer higher yields than their American equivalent.

It is also good news for Britons that are planning to holiday in the US this year, as the generous exchange rate will see that their money goes further.

Despite the widespread negativity, the level of the base rate of interest in the UK also seems to be having a positive impact on the performance of the pound.

At present the interest rates in America is even lower than in the UK, hovering around the zero to 25 per cent mark. In the UK that rate has remained static at 0.5 per cent since March while in the eurozone the interest rate is one per cent following a recent cut.

The euro was also up against the dollar, worth $1.4197, recording a five month high.

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