Sterling hits 26-year high against dollar


Sterling hit a 26-year high against the dollar on Tuesday as expectations that the Bank of England would move to cut UK interest rates were dented.

Analysts said comments from Kate Barker, a member of the central bank’s monetary policy committee, were responsible for the move. On a visit to Guernsey on Monday Ms Barker said she felt the present situation was a slowdown in the UK economy, rather than anything more serious.

Howard Archer at Global Insight said given that Ms Barker was as a swing voter on the nine-strong committee, her comments were particularly significant when trying to ascertain the prospects for an early UK interest rate cut.

This suggests that Ms Barker believes that there is not yet a compelling case for the bank to take pre-emptive action to try and reduce the risk that the credit crunch could trigger a sharp downturn in growth,” he said.

This reinforces our view that there is not nearly enough evidence so far of a significant economic slowdown for most members of the monetary policy committee to vote for an interest rate cut as soon as November, or even this year.”

The pound rose 0.1 per cent to $2.0660 against the dollar, surpassing the previous high of $2.0655 it hit in July, gained 0.3 per cent to £0.6967 against the euro and climbed 0.2 per cent to Y237.15 against the yen.

 


Financial Times
10/30/2007 7:12:56 AM