Pound drops to 24 year low against dollar

Although it made a weak recovery over the course of trading on Thursday, the pound fell to its lowest level against the US dollar in 24 years, hovering at around 1.37.

Analysts blame the pound’s low, not seen since 1985, on Britain’s economy and the dollar strengthening on the elation in the US over the country’s new president.

James Hughes, an analyst with CMC Markets, commented that investors were optimistic about the economic stimulus package promised by US President Barack Obama, even though the details had not been revealed.

“It is the whole Obama syndrome at the moment. It doesn’t matter what is coming out if it has got his name on it, it is going to be good news,” Hughes said.

He added that the probability of additional cuts in the interest rate in the UK was also hurting the pound.

“Basically it is poor sentiment for the pound, good sentiment for the dollar,” he noted.

A further weakening of the value of the pound means that UK tourists face more expensive holidays abroad.

Thanks to www.theherald.co.uk for the above quotes, for more information on this article please visit their website.

www.cmcmarkets.com