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Will sterling feel more pain in 2010?

There is growing concern for the UK currency in 2010 with a consensus view that UK base rates are unlikely to rise significantly before the end of 2010. This is a situation which has been brewing for some time and the vast majority of analysts believe the Bank of England will maintain base rates at 0.5% for many months to come. Not only will this impact upon savers, and the income they receive, but it will also place further pressure on the pound and we could see sterling fall further in the currency exchange markets.

We have already seen a number of overseas investors looking towards the UK with the likes of Kraft Foods, and its bid for Cadbury, potentially taking advantage of the strong dollar compared to the pound. If this trend in the currency markets continues we could see more overseas investors looking to cherry pick the best of the UK's assets although they will still have to pay a price which is acceptable to shareholders.

All in all, it looks as though the UK is still set for a very difficult period, at least in the early part of 2010, with the UK government having a very difficult task of attempting to balance the books while leaving consumers and businesses with enough funds to pull the UK economy out of recession.

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