31 October 2007
The pound has broken a 26-year-old record against the dollar as interest rate hopes on both sides of the Atlantic pushed the currency higher.
Sterling reached more than 2.06 US dollars as economists forecast a further reduction in rates in the US.
CMC Markets, currency expert, James Hughes said: “We’ll probably see the pound test these levels a few times ahead of the interest rate decision.
“Potential strength on the decision depends if a cut has already been fully factored in, but I don’t think it has yet.”
Back on November 5, 1980, the pound hit 2.446 dollars, before which the highest levels seen were in the early 1970s, when it reached 2.644 dollars.
But Mr Hughes said it is possible the sterling could break through the level seen in the 1980s, given the current fears over the US economy.
The news is good for investors looking to buy businesses or property in the US, although exporting firms are feeling the pinch.
Meanwhile in the UK, previous hopes that rates will be cut as early as November have been scaled back after inflation and economic growth figures provided little compelling evidence for a reduction.
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