The Pound is closing in on a two-year high against the USD en route to crossing the mythical barrier of 2 USD. Many traders and economists believe that it is only a matter of time before this threshold is breached- that it is a question of when and not if it will happen. This month, the Bank of England raised short-term interest rates to 5%, bridging the gap with US rates and eroding one of the last pillars that is propping up the USD. Once interest rates converge, many short term investors will likely shift funds out of US capital markets, and the USD will adjust to more closely reflect economic fundamentals.
Read More: Pound threatening $2 mark
Friday, November 24, 2006
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