Pound’s rally continues despite rate cut

| February 10, 2009 | 0 Comments
Pound's rally continues despite rate cut

The pound’s rally against the euro and the dollar has not been dampened by last week’s 0.5% base rate cut, according to currency analysts.

Marc Cogliatti, a currency strategist at HiFX, said the pound has strengthened almost 12% against the euro since the start of this year, despite two base rate cuts.

Cogliatti said: “The decision by the Bank of England to cut interest rates was widely anticipated by the market and thus there was no negative impact on the UK currency.

“The Pound is still looking oversold and undervalued so we anticipate that the current correction will continue further before it runs out of steam.

“Nevertheless, it is still too soon to call a base for Sterling and as yet, the longer term downward trend remains unbroken.”

The pound’s fight back is good news for businesses importing goods from Europe and the US; last year’s plummet in exchange rates saw profit margins for importers significantly reduced.

Holidaymakers and British ex-pats living in Europe will also be relieved. In December, many holidaymakers were exchanging a pound for less than a single Euro.

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