Sterling continues to fall as traders target the UK
Sterling continues to fall on the foreign exchanges as traders target the UK currency which is currently friendless. What was initially a situation of concern has now turned into a disaster for the UK government as the currency continues to be pounded by speculators and investors alike. So what next for the embattled UK currency?
As we have covered on a number of occasions the short-term outlook for sterling is concerning to say the least with interest rates set to fall further and the UK economy at serious risk of a deep recession. Against the backdrop of this situation there would appear to be very little reason for traders to switch into sterling and very little short-term likelihood of a serious bounce.
Even though exports will now be more attractive to overseas clients a recent report from the Manufacturers Association seemed to indicate this particular attraction has yet to be converted into increased business. We will also start to see higher import costs to the UK which if allowed to continue will see the cost of living and inflation rise. This is probably the last situation the government would want to find itself in as we approach 2010 and the next general election.
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