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Sterling under pressure, but why?

As the exchange rate markets continue to beat down upon sterling the UK currency has now dipped below the $1.80 level against the dollar. A downwards move of 10% in August alone as well as a general devaluation on the markets of around 16% over the last year do not bode well for the immediate future. So what is going on?

One concern that the markets have is the state of the UK public purse which has seen the authorities borrow literally billions of pounds to try and refloat the economy. So far these massive amounts of money have had very little impact and if the truth be known it looks as though the recent move with regards to stamp duty will have a limited impact as well. This reckless spending of public funds and a seemingly unsteady government has led to the risk factors attached to sterling increasing markedly.

It also seems as though the markets are still digesting Alistair Darling's recent comments on the UK economy, comments which look like costing him his position in the cabinet at the next reshuffle. Was he foolish or brave to air his thoughts in public?

Alistair Darling may not have the character to set the political word alight but he is a man of honesty and integrity - how many serving MPs can boast that?

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