Pound Down Again

Lately, the British pound seemed to be regaining lost strength, but on Monday it was back down against the US dollar.  It was the weakest one-month level for the currency.

Apparently, the pound is due to suffer the effects of a few factors:

  1. Fears over the UK’s A rating
  2. Fears over the Bank of England’s asset purchase scheme
  3. General pessimissm over the future of the economy

Now, number 1 on the list surfaced a while back but now seems to be back on the ‘fears’ list for investors – S&P’s already changed their outlook to ‘negative’ for the month of May, which was a blow.  Where the BoE is concerned, they have already moved 15 per cent of gilt issuance to the balance sheet, but why do they need more?  There seemed to be so much upbeat mood in the financial markets recently, is the Bank really so concerned for the economy?

Overall, many economists and business people doubt the safety of the sterling as a good investment currency.

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