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Pound under further pressure after short term rally fades

Sterling is today under further pressure after the short term rally over the last couple of days begins to fade amid concerns that the UK economy is struggling and interest rates are set to fall in the short term. After touching 98p to the euro just a few days ago there had been something of a short-term rally but even this is hitting the buffers as the realisation that the UK is in serious trouble begins to hit the currency exchanges around the world.

Ironically the fall in the value of sterling against the majority of the major currencies of the world could offer something of a pick me up in due course as it will make UK companies more competitive in overseas markets. The downside to this is the fact that imports will be substantially more expensive which could impact upon inflation and the cost of living in the UK. Many had already expected the reduction in the value of sterling to have kicked in but as yet there are no signs of increased manufacturing orders.

There is serious concern that 2009 could see further pressure on sterling and an eventual crossover of the parity point against the euro.

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