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Pound expected to rally against the dollar next year
03.09.09
The pound will rise slowly against the dollar over the coming year as confidence in the British economy improves, experts predicted today.
But shoppers hoping for bargain hunting trips to New York this Christmas should not get too excited. A poll of 60 City economists conducted by Reuters found the consensus is that the pound will still be only around $1.64 by then — only about 2 cents stronger than it is today.
That compares with the $2.1074 it hit just before Christmas 2007.
Views remain mixed among experts but the poll suggested the pound would come in at $1.64 in three months, $1.63 in six months and $1.65 in a year. Each estimate was 2 cents weaker than was predicted in the same poll a month ago.
Sterling has lost about 3% against the dollar over the past month although that did follow a strong rally. The pound had fallen to 23-year lows in January of $1.35.
Analysts said the recent sell-off was due to jitters about the state of the UK economy. A run of weak economic statistics has suggested Britain is in a worst financial state than rival economies. That means the Bank of England is less likely to put up interest rates than its European and US peers.
