I know a few American expats here in London whose monthly salary is paid in US dollars. And as the US dollar continues to weaken against the British pound, thank goodness I am not one of them. London is wicked expensive that even if you make a good salary in US dollars, once you coverted your money each month, you would be taking a serious hit. For every Britsh pound, you would only get about 50 cents. That is pretty harsh!
Sterling flirts with 14-year high against dollar
Financial Times, By Peter Garnham
Published: November 29 2006 11:37 | Last updated: November 29 2006 14:26
Sterling hit a two-year peak against the dollar and came within touching distance of its strongest level for 14 years early on Wednesday, as traders continued to put pressure on the beleaguered US currency.
The pound traded as high as $1.9545 against the dollar in early trade. A break higher than $1.9548 would send the pound to its highest level against the greenback since its ejection from the European Exchange Rate Mechanism in September 1992.
Traders said that the current volatility on the foreign exchange markets had seen fundamental factors take a back seat as short-term investors made a series of assaults on key technical levels in sterling/dollar.“The speed of sterling’s gains suggests that the market is unlikely to be satisfied until the key objective around $2 against the dollar is reached,” said Tim Fox at Dresdner Kleinwort.
“It is feasible that this psychological target may start to override fundamental considerations, especially heading into December when seasonal factors usually give sterling a strong lift.”
However, the dollar reversed its losses later in the session after an unexpectedly large upward revision to US growth.
Official data showed that US gross domestic product grew at an annual rate of 2.2 per cent in third quarter, more than the 1.6 per cent first estimated.
The news sent the pound down to $1.9490 against the dollar, down 0.2 per cent from its level in late trading in New York overnight.
Meanwhile, the dollar rose 0.4 against the euro to $1.3140 and 0.2 per cent against the yen to Y116.25.
The dollar has been under pressure since late last week amid a growing perception that US interest rates might have peaked and fears that global central banks were set to diversify their foreign exchange reserves away from the greenback.
Conversely, the pound has been supported by expectations of a further UK rate hike early next year amid increasing evidence that the Bank of England’s current monetary tightening cycle has done little to cool the UK property market.
Copyright The Financial Times Limited 2006
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