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Sterling falls below $1.50 against the dollar

Sterling has fallen to a recent low of under $1.50 on the exchange rate markets after the Bank of England came out to suggest that UK rates could fall substantially lower in the short term. This has taken away much of the support for sterling which has fallen from around two dollars to the pound over the last 12 months. A mixture of falling interest rates and a weakening economy not to mention the increasing governmental debt have been the main causes of the collapse.

There do not appear to be any immediate signs of a recovery in the sterling dollar rate and if this continues it will become more and more expensive to import goods into the UK and cheaper to export as overseas markets would be able to buy more pounds for their local currency. In the short term this could lead to a substantial rise in the cost of UK goods which are imported from overseas with clothing a particular target as mentioned in the recent Next this statement.

Even though many exporters have been crying out for a reduction in the strength of sterling over the years this shift in the exchange rate has the potential to have major consequences in the short to medium term.

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