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When will sterling bottom out?

It seems like a million years ago since the UK currency was around the $2 to £1 level as sterling again came under pressure after comments from credit ratings agency Fitch. Even though the overall situation appears to have improved over the last 24 hours the comments from Fitch have put UK investors and UK analysts on alert. It appears highly unlikely we will see the UK sovereign credit rating reduced but the fact it is the weakest of the developed countries in the world is of concern.

Perhaps this is part of the reason why the Bank of England today attempted to talk up the UK economy by suggesting that the worst was over and growth rates would return to 4% in 2011 and 3% thereafter. The Bank of England has in the eyes of many people been one of the more downbeat observers of the UK economy and today's change of forecast could well be a significant turning point. Is this a false dawn or is this the real deal?

As we mentioned in one of our earlier post, many analysts have been hit by so-called false dawns in the UK economy over the last 12 months making them more cautious and more wary of calling a turning point on the road to recovery. However, it does look to all intents and purposes as if we have turned the corner but time will tell!

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