The Great Pound strengthened today, erasing its losses against the U.S. dollar and the Japanese yen, amid the speculations that the central bank will raise the interest rates after forecasts promised that the economic growth would accelerate and the budget deficit would be decreased.
The Bank of England was keeping the key rate at the record low level for 16 months even as the inflation exceeded the governmentâs upper limit. The inflation reached 3.7 percent in April, the highest level in 17 months, while the governmentâs upper limit was 3 percent. The concerns, aroused by this data, were understandable and it’s good that the forecasts eased them by promising that the deficit will decrease from 155 billion pounds this fiscal year to 71 billion pounds by April 2015. The forecast for the gross domestic product also improved.
The good news relieved the investors’ worries and brought the hope that the debt crisis won’t cripple the Britain’s economy. The analysts say that the positive comments may mean that the Britain’s policy makers have found a way to battle the budget deficit. If that’s the case, than we should see more positive news for the sterling in the near future.
GBP/USD rose to 1.4745 today as of 17:17 GMT after it opened at 1.4553. GBP/JPY climbed to about 135.30 from the opening level of 133.56.
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