Pound increases its strength against the dollar
Today saw the UK pound(£) reach the highest rate against the american dollar($) for the first time in 26 years. It seems there has been speculation that the US will cut its interest rates next week and as such the pound has gained in value against the $ and the Euro.
It has now risen to over the $2 mark. This is likely to increase as many investors are actively encouraged to exchange any dollars they may have for pounds as they get a better return on their investment (ROI).
Great news for any brits planning a trip to the US, especially coming up to Christmas time. It is also good for UK businesses who export transatlantically. Not so good for americans or US companies holidaying or working with the UK.
The central US bank that controls the country's interest rates is called the Federal Reserve, and is likely to cut rates in the next few days in a bid to reduce the impact the housing market crisis will have on consumer and businesses.
America has already reduced interest rates to 4.75% in september as it realised the property market crisis was affecting the economy on a bigger scale than they imagined. There have even been worries the US is heading for a recession, but it's probably too early to tell at the minute.
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